US CPI preview: Fed rate expectations dive, USD/CAD tests 1.37
In the wake of the implosion of SVB, traders are dialing down their expectations for Fed hawkishness next week...
Share this:
Key takeaways
- The upcoming US CPI report could tip the scales for the Fed’s highly-anticipated interest rate decision next week.
- The report comes as traders sift through the confusion and uncertainty following the collapse of Silicon Valley Bank and fears of contagion in the banking sector.
- Rate expectations could still change dramatically if the CPI report misses expectations of a 6.0% y/y increase.
When will US CPI be released?
The US Bureau of Labor Statistics will release the consumer price index (CPI) for February on Tuesday, March 14 at 8:30 ET.
What are the expectations for the US CPI report?
Traders and economists are expecting the report to show headline consumer prices rose 6.0% year-over-year, down from 6.4% last month. Core (ex-food and -energy) CPI is expected to come in at 5.5% y/y, down slightly from 5.6% last month.
US CPI preview
Traders are on tenterhooks over the upcoming inflation report, which will test an already worried market with concerns over the Federal Reserve hawkishness and the potential fallout from the largest bank failure since the financial crisis.
What was expected to be one of the biggest CPI reports in recent memory has been upstaged to an extent by the weekend’s volatility, but Tuesday’s update on consumer prices should still nonetheless be a major market mover.
Put simply, the decline from 9% to 6% inflation was always going to be the “easy part” for policymakers; the big question moving forward is if the Fed can engineer a continued decline in price pressures without “breaking” any other aspects of the economy.
Despite aggressive action over the weekend, the collapse of Silicon Valley Bank has led to confusion and uncertainty in the market, with concerns that it could lead to contagion among other regional banks (see my colleague Josh Warner’s explainer of the situation here). In essence, the market is nervous that the Fed's campaign to fight inflation by ending the era of cheap money has exposed cracks in the economy that could widen if it keeps up its rate hikes.
In the wake of the implosion of SVB, traders are dialing down their expectations for Fed hawkishness next week, with a 25bps interest rate hike 70% discounted and a 30% implied probability of no rate hike whatsoever, according to CME's Fedwatch tool.
Source: CME FedWatch
Canadian dollar technical analysis – USD/CAD pulling back to 1.37
The US dollar is the weakest major currency on the day, but it is bouncing off its intraday lows as we go to press. One pair to watch closely around the US CPI report and beyond will be USD/CAD.
After breaking convincing out above previous resistance at 1.3700 last week, the North American pair is pulling back to retest that level today. As many traders know, once a resistance level (price “ceiling”) is broken, it can provide support (a “floor” under price) when the market pulls back to it.
If the 1.3700 level does bounce off 1.3700, bulls may start to look for a resumption of last week’s upside momentum, with room to retest last week’s highs near 1.3850 or even test the psychologically-significant 1.40 level in time.
Source: StoneX, TradingView
-- Written by Matt Weller, Global Head of Research
Follow Matt on Twitter @MWellerFX
Key takeaways
- The upcoming US CPI report could tip the scales for the Fed’s highly-anticipated interest rate decision next week.
- The report comes as traders sift through the confusion and uncertainty following the collapse of Silicon Valley Bank and fears of contagion in the banking sector.
- Rate expectations could still change dramatically if the CPI report misses expectations of a 6.0% y/y increase.
When will US CPI be released?
The US Bureau of Labor Statistics will release the consumer price index (CPI) for February on Tuesday, March 14 at 8:30 ET.
What are the expectations for the US CPI report?
Traders and economists are expecting the report to show headline consumer prices rose 6.0% year-over-year, down from 6.4% last month. Core (ex-food and -energy) CPI is expected to come in at 5.5% y/y, down slightly from 5.6% last month.
US CPI preview
Traders are on tenterhooks over the upcoming inflation report, which will test an already worried market with concerns over the Federal Reserve hawkishness and the potential fallout from the largest bank failure since the financial crisis.
What was expected to be one of the biggest CPI reports in recent memory has been upstaged to an extent by the weekend’s volatility, but Tuesday’s update on consumer prices should still nonetheless be a major market mover.
Put simply, the decline from 9% to 6% inflation was always going to be the “easy part” for policymakers; the big question moving forward is if the Fed can engineer a continued decline in price pressures without “breaking” any other aspects of the economy.
Despite aggressive action over the weekend, the collapse of Silicon Valley Bank has led to confusion and uncertainty in the market, with concerns that it could lead to contagion among other regional banks (see my colleague Josh Warner’s explainer of the situation here). In essence, the market is nervous that the Fed's campaign to fight inflation by ending the era of cheap money has exposed cracks in the economy that could widen if it keeps up its rate hikes.
In the wake of the implosion of SVB, traders are dialing down their expectations for Fed hawkishness next week, with a 25bps interest rate hike 70% discounted and a 30% implied probability of no rate hike whatsoever, according to CME's Fedwatch tool.
Source: CME FedWatch
Canadian dollar technical analysis – USD/CAD pulling back to 1.37
The US dollar is the weakest major currency on the day, but it is bouncing off its intraday lows as we go to press. One pair to watch closely around the US CPI report and beyond will be USD/CAD.
After breaking convincing out above previous resistance at 1.3700 last week, the North American pair is pulling back to retest that level today. As many traders know, once a resistance level (price “ceiling”) is broken, it can provide support (a “floor” under price) when the market pulls back to it.
If the 1.3700 level does bounce off 1.3700, bulls may start to look for a resumption of last week’s upside momentum, with room to retest last week’s highs near 1.3850 or even test the psychologically-significant 1.40 level in time.
Source: StoneX, TradingView
-- Written by Matt Weller, Global Head of Research
Follow Matt on Twitter @MWellerFX
How to trade with City Index
You can trade with City Index by following these four easy steps:
- Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the market you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD Q4 2026 Outlook: Euro at a Crossroads as Fed, ECB Tighten 9 25 2026
EUR/USD enters Q4 at a pivotal inflection point as competing Fed-ECB policy paths and persistent inflation risks collide with major technical support.
USD/JPY Q4 2026 Outlook: Hawkish Fed Pricing Clashes With Intervention Risk
The year-end tug-of-war is clear: hawkish Fed pricing supports USD/JPY, while intervention risk limits the upside.
USD/CAD and USD/MXN Q4 2026 Outlook: Will the U.S. Dollar Dominate North America Again?
The final stretch of 2026 is approaching, and North America's major currencies have begun to show a shift in the strength dynamics seen earlier in the year. New expectations of a more aggressive monetary policy stance, particularly in the United States, could be significantly reshaping the outlook for the region. At the same time, this backdrop, combined with potential trade tensions across North America, may become one of the most important drivers of currency performance in the months ahead.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.