The Week Ahead: US and Germany inflation, Oracle results

While we’re heading into a quieter week for diaried events (unexpected events are a different matter), there are a couple of significant economic data releases to look out for. The US consumer price index (CPI) reading for February is expected to show that price growth cooled, while inflation in Germany is thought to have stabilised last month. On the earnings front, software giant Oracle is the biggest US company by market capitalisation scheduled to report quarterly results in the coming week.

Oracle Q3 results

Monday 10 March
Oracle’s shares have come under pressure recently, falling more than 20% since November’s record high to current levels just above $150 as the AI trade has faltered. This makes the computer technology company’s upcoming earnings report an important one. Analysts estimate that third-quarter earnings grew 5.9% to $1.49 a share as revenue increased 8.4% to $14.4bn. Looking ahead to Q4, analysts expect Oracle to guide earnings of $1.79 a share on revenue of $15.9bn. The options market is pricing in a roughly 8% move in the stock post-Q3 earnings.

Options positioning has turned somewhat bearish on the shares, which means hedging flows could push the stock higher after the results are released, potentially sending it back to $161. As for downside risk, a break below support at $150 could send the stock down to fill the gap near $143 that was created in September last year, a move that may be supported by negative momentum on the relative strength index (RSI), which has fallen to a reading of 35. 

Oracle share price, May 2024 - present

^{Sources: TradingView, Michael Kramer}

US February CPI

Wednesday 12 March
US consumer prices continued to rise in February, but at a slower pace than in January, based on economists’ estimates. Their estimates suggest that headline CPI rose 0.3% month-on-month and 2.9% year-on-year in February, down from 0.5% and 3%, respectively, in January. At the same time, core CPI – which strips out volatile items such as food and energy – is expected to have risen 0.3% month-on-month and 3.1% year-on-year in February, down from 0.4% and 3.3%, respectively, a month earlier. 

Any easing of price pressures could have implications for the dollar. The USD/JPY pair has come back into focus of late, with the yen having strengthened past ¥148 per dollar on Thursday to reach its lowest levels since last October. The upcoming US CPI report is likely to play a significant role in determining whether the break below support at ¥149 will last. If the CPI figures are in line with or higher than expected, US interest rates are likely to remain higher for longer to combat inflation. That could send USD/JPY back above ¥149, suggesting that the recent move was a false breakout attempt. The yen could then weaken back to ¥155. However, if the yen continues to strengthen against the dollar after the CPI figures are released, it might head towards ¥141, a level last touched in September 2024. 

USD/JPY, June 2024 - present

^{Sources: TradingView, Michael Kramer}

Germany February CPI

Friday 14 March
Economists estimate that Germany’s CPI increased 2.3% in the year to February, unchanged from the preliminary reading and the same rate of inflation as in January. Inflation in Germany appears to have stabilised after falling sharply over the past two years. As inflation has returned to around the European Central Bank’s 2% target rate, the central bank may be nearing the end of its easing cycle. On Thursday the ECB cut interest rates as expected by a quarter of a percentage point to 2.5% and signalled a possible slowdown in future cuts. Coupled with Germany’s new spending plans, this could give the euro a platform to rise against the dollar.

The euro has risen sharply against the dollar in recent days, jumping from less than $1.04 on 28 February to above $1.0864 on 7 March. Indeed, EUR/USD now appears overbought as it’s broken above its upper Bollinger Band and has a RSI reading of more than 70. However, the pair may have further upside potential given the rapidly evolving geopolitical situation in Europe and the US. EUR/USD could continue to move higher, possibly towards the $1.10 region, after a significant resistance level at $1.052 was cleared on 4 March. 

EUR/USD, September 2024 - present

^{Sources: TradingView, Michael Kramer}

Key economic and company events

The coming week’s major economic announcements and scheduled US and UK company reports include:

Monday 10 March

• Australia: March Westpac consumer confidence index
• Germany: January industrial production, January trade balance 
• Japan: Q4 gross domestic product (GDP)
• Results: BioNTech (Q4), Oracle (Q3)

Tuesday 11 March

• US: January Job Openings and Labor Turnover Survey (JOLTS)
• Results: Dick's Sporting Goods (Q4), Domino's Pizza (FY), Ferguson Enterprises (Q2), Kier (HY), Persimmon (FY), Viking Holdings (Q4) 

Wednesday 12 March

• Canada: Bank of Canada interest rate decision
• Germany: 10-year bond auction
• US: February consumer price index (CPI)
• Results: Adobe (Q1), Balfour Beatty (FY), Crown Castle (Q4), Legal & General (FY), Lennar (Q1), PDD Holdings (Q4), Williams-Sonoma (Q4)

Thursday 13 March

• Australia: March consumer inflation expectations
• Eurozone: January industrial production 
• US: Weekly initial jobless claims to 7 March, February producer price index (PPI)
• Results: DFS Furniture (HY), DocuSign (Q4) 

Friday 14 March

• France: February CPI
• Germany: February CPI
• UK: January GDP
• US: March Michigan consumer sentiment index 
• Results: RLX Technology (Q4)

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.