The US Federal Reserve will keep raising rates

What you need to take care of on Wednesday, February 15:

Financial markets traded with an optimistic yet cautious tone throughout the first half of the day, as investors awaited the release of US inflation figures. The United States Consumer Price Index rose at an annualized pace of 6.4% in January, better than the previous 6.5% but missing the 6.2% expected.

Financial markets struggled with the figures, as inflation eased, but at a slower-than-anticipated pace. That means the US Federal Reserve could keep tightening the monetary policy until achieving its 2% target. Markets moved away from high-yielding assets, with Wall Street edging sharply lower and the US Dollar surging.

Comments from  Dallas Federal Reserve President Lorie Logan added pressure on stocks, as she noted that “we must remain prepared to continue rate increases for a longer period than previously anticipated. Also, Federal Reserve Bank of New York President John Williams hit the wires and noted that the work to control too high inflation is not yet done. Finally, Philadelphia Fed President Patrick Harker reinforced the idea by saying they are not done, but they are likely close.

Across the pond, European Central Bank (ECB) Governing Council member Gabriel Makhlouf said on Tuesday that the ECB could raise rates above 3.5% and hold them there for the remainder of the year.

EUR/USD traded between 1.0700 and 1.0800 to finally settle at around 1.0730. GBP/USD peaked at 1.2268 but ended the day around 1.2160.  The USD/JPY pair surged to end the day above 133.00.

AUD/USD hovers around 0.6980 as market players await Reserve Bank of Australia Governor Philip Lowe’s testimony before the Senate. USD/CAD trimmed early losses and stands in the 1.3340 region.

Spot gold dipped to 1,843.22 but ended the day above $1,850 a troy ounce. Crude oil prices are little changed on a daily basis, with WTI changing hands at $79 a barrel.