Investors are keeping a close eye on the upcoming release of March inflation data as they look for clues about the future path of the Federal Reserve's interest rate policy. The US consumer price index is projected to have slowed last month to 5.1% year-on-year from 6.0% in February. The core prices, which strip out volatile items like food and energy for Fed officials, are expected to rise to 5.6% from 5.5%. Investors are also awaiting the US central bank's minutes from its latest meeting for more insights into policymakers' stance. Meanwhile, gold prices rose above $2,000 as investors sought safe havens amid concerns about a possible recession in the US.
The inflation data will be crucial for the Federal Reserve as it tries to curb soaring prices. The numbers could determine whether the central bank chooses to ease away from its rate-hiking cycle or not. Investors are particularly interested in the future path of the Fed's recently aggressive monetary policy tightening campaign. Meanwhile, gold prices have risen as concerns over banks have increased expectations that the Fed has limited room to keep lifting rates. A pause in the Fed's rate hike cycle bodes well for gold and other non-yielding assets, given that it entails a lower opportunity cost for holding such assets.
Oil prices were mostly flat, with traders awaiting the inflation figures as well as US government crude inventories. Weakness in the dollar helped push up crude benchmarks by around 2% on Tuesday, even as the American Petroleum Institute reported a surprise increase in crude stockpiles last week. The U.S. government will publish its latest crude stockpile data later on in the session. In corporate news, LVMH will report its first quarter revenues today, as the luxury giant behind brands like Louis Vuitton and Dior looks to build on record sales and profits last year. The results may give some indication about the state of demand in China, a crucial market for the high-end products sold by LVMH, which was hit by a wave of COVID-19 cases in the prior quarter following a sudden decision to lift pandemic-era health restrictions.
In conclusion, investors are eagerly awaiting the release of the March inflation data, which will provide clues about the future path of the Federal Reserve's interest rate policy. Gold prices have risen above $2,000 as investors sought safe havens amid concerns about a possible recession in the US. Meanwhile, oil prices were mostly flat, with traders awaiting the inflation figures as well as US government crude inventories. LVMH will report its first quarter revenues today, which may give some indication about the state of demand in China.
