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Mark O' Donnell
Research Analyst
March 7, 2022

What inflation reports are you trading this week?

*Please note; The author is working from UTC +13 when determining the timeline of data releases. 

This week, the most important economic events are split between the US and China. Inflation data from these countries will be at the forefront of traders' minds as they set their positions this week.

Wednesday, March 09

China Inflation Rate YoY FEB

China's Inflation Rate YoY for February is due on Wednesday afternoon. 

China's YoY inflation rate has decreased dramatically over the past three readings, falling from 2.3% in November 2021 to 0.9% in January 2022.

Now inflation in the country is far lower than the People's Bank of China (PBoC) mandated range and may even head lower in the February result. The market consensus is for inflation to fall ten basis points to 0.8%.

Such a reading would provide the PBOC with more reasons to continue loosening its monetary policy. PBoC's Governor Yi Gang expects to take such action, noting last Wednesday that the bank anticipates that it will "increase support for key areas and weak links in the economy".

China CPI

Thursday, March 10

JOLTs Job Openings JAN

The Jolts Job Openings report for January is released on Thursday early morning.

Job numbers in the US have floated around 10 to 11 million for the past 7-months. The January Job number is not expected to be any different. Market consensus forecasts no change in this month's report, with 10.9 million jobs that labour participants in the country have not filled.

The JOLTS report follows last week's Non-Farm Payroll (NFP) for February, which beat market expectations by a wide margin. Last Friday, the NFP recorded that the US economy added 680K jobs, versus an expected 400K jobs. February's report was the greatest in seven months.

Friday, March 11

Inflation Rate YoY FEB

ECB Interest Rate decision

A cursory note should be made that the European Central Bank will be making an interest rate decision on Friday. This event only requires a cursory note because of the extreme dovishness that the ECB has taken regarding the EU inflation (5.8% in February). As such, the market believes that the ECB won't move the interest rate from its current 0% per annum and deliver non-committal commentary.

Otherwise, the more significant event on Friday will be the US inflation rate YoY for February.

Currently, inflation in the US is at a 40-year high, at 7.5% YoY. The market thinks that inflation will hit 7.9% in February's reading.

The US inflation rate will inform the US Federal Reserve’s interest rate decision on March 15/16. A strong inflation number puts pressure on the Central Bank to consider a 50 basis points moving forward. A rising probability for a 50 basis points move will likely move the dial in US equities, gold, and USD pair markets.

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