​​​​​​​S&P 500 Gains, Bitcoin Surges, and Currencies React to Economic Developments | Daily Market Analysis

Key events:

• New Zealand - RBNZ Interest Rate Decision
• USA - GDP (QoQ) (Q4)
• USA - Crude Oil Inventories
• USA - FOMC Member Bostic Speaks
• USA - FOMC Member Williams Speaks

On Tuesday, the S&P 500 closed higher, thanks to dip buyers alleviating losses in the tech sector. Quarterly results from Macy's and Lowe's, surpassing expectations, propelled retail stocks upward just before a crucially anticipated inflation report later in the week. The S&P 500 recorded a 0.2% gain, the NASDAQ Composite saw a 0.4% rise, while the Dow Jones Industrial Average experienced a 0.3% decline, equivalent to a 96-point drop.

Unexpectedly, consumer confidence dipped to 106.7 in February from the prior month's 110.9, reaching a three-month low. The enduring impact of inflation continues to exert pressure on consumers. Stifel noted, "Similar to businesses scaling back investment amid a positive yet uncertain economic outlook and monetary and fiscal policy, consumers are becoming less confident."

In January, durable goods orders fell more than anticipated, declining by 6.1%, primarily due to a substantial decrease in bookings for commercial aircraft. These reports emerge as Fed officials persist in advising caution against premature rate cuts.

On a different note, Bitcoin achieved a two-year high, marking its most significant two-day rally in the current year. This surge was attributed to indications that significant players were acquiring the cryptocurrency. Ether, a smaller rival, also surpassed $3,200 for the first time since 2022. Bitcoin's recent 10% rally over two sessions was fueled by MicroStrategy's Monday disclosure, revealing the purchase of approximately 3,000 bitcoins for $155 million.

The Australian Dollar encounters challenges following the release of Monthly Consumer Price Index data from Australia, which proved to be cooler than anticipated. Adding to market uncertainty, the decline in the S&P/ASX 200 followed subdued price action on Wall Street overnight. This uncertainty looms as the market awaits the release of economic data from the United States. According to the Australian Bureau of Statistics, there was no change in the price of a fixed basket of goods and services acquired by household consumers. The Monthly Consumer Price Index remained stagnant at 3.4% for January, falling below the market's expectations of 3.5%. Investors are now shifting their focus to the release of Australian Retail Sales data on Thursday for additional insights into the economic outlook.

On another front, the Japanese Yen recorded modest gains against its American counterpart on Tuesday, supported by slightly stronger-than-expected domestic consumer inflation figures. Japan's core CPI exceeded forecasts, reigniting speculations that the Bank of Japan might consider ending negative interest rates soon. This development provided a positive boost to the JPY. However, the uptick lacked bullish conviction amid expectations that a recession in Japan could lead the BoJ to postpone its plans to tighten monetary policy.

Furthermore, the USD/JPY pair gained positive traction during the Asian session on Wednesday, building on the overnight bounce from the psychological mark of 150.00. The emergence of some US Dollar buying played a role in this positive momentum. Firming expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period proves to be a key factor in lending support to the USD.

The GBP/USD pair faces significant selling pressure during the Asian session on Wednesday, slipping to the 1.2665 region after experiencing directionless price moves the previous day. Despite the disappointing release of US Durable Goods Orders on Tuesday, investors appear convinced that the Federal Reserve will refrain from cutting interest rates until the June policy meeting. This has revitalized demand for the US Dollar, becoming a key factor contributing to the downward pressure on the GBP/USD pair.

Interestingly, the pair's decline remains unaffected by the hawkish remarks made by Bank of England Deputy Governor Dave Ramsden overnight. Ramsden expressed the need for more evidence that inflationary pressures were easing before considering a cut in interest rates.