FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews

US Inflation Data Spooked Markets

11 November 2021 Written by Naeem Aslam  AvaTrade Chief Market Analyst Naeem Aslam

US markets are closed today due to a public holiday, and this means trading volumes in European markets are likely to be light. European futures are trading lower as traders are still trying to digest the economic numbers out of the US—the US CPI reading. It is important to keep in mind that global markets aren’t really trading in tandem and that is primarily due to the different expectations around the monetary policy. Although one common theme among them is that inflation is on the move, and it is only moving to the upside, which isn’t great news for the equity markets or for the next quarterly earnings season either.


The US inflation data surprised investors yesterday. Traders were hoping that they would get to see a reading showing that inflation is easing off but in fact inflation data confirmed that things are going to become a lot uglier before they become normalised. The US CPI number came in at 0.9%, against the forecast of 0.6%. This reading created enormous volatility in the US markets.

Stock Market

In the US equity markets, we saw a sharp sell off as traders are starting to believe that the Fed is well behind the curve, and it is absolutely necessary for the Fed to admit that the current inflation situation may not be transitory. Market players believe that there is strong possibility that they may see the Fed raising the interest rate sooner rather than later. Currently the market expectations are that the Fed will start lifting the interest rates in Q3 of the next year. But after the inflation data, there is a possibility that we may see the Fed start hiking the interest before that, especially if inflation data continues to soar like yesterday.


The inflation data also brought enormous volatility in assets that are considered as a hedge against inflation such as gold and Bitcoin. The gold price had been trying to break above the 1825 price level for the last number of months. However, gold traders had been failing to move the price above that mark and it was only yesterday that they saw some fruits for their labour. Basically, the inflation data provided a much-needed boost for the gold price, and the yellow metal price went straight through its previous resistance of $1825 to $1835. The price made a high of $1864.


As for the bitcoin price, we also saw the price moving sharply to the upside, and Bitcoin recorded another all-time high of 69K. However, after touching that price, we saw a serious sell-off in the BTC price, and the crypto king fell all the way to 63K. In a way, this is a blessing for many investors because now those investors who have been waiting on the side lines could get back on the Bitcoin train if they want to. This is because on the intra-day, 4-hour time frame, the prices are certainly oversold, and this presents an opportunity to bag some bargains.


In the forex market, we also saw some sharp moves and that is primarily due to the strength in the dollar index. The dollar soared against the Euro, Sterling and other G10 currencies. It is likely that this trend may continue, and this is mainly due to the change of odds in the Fed lifting the interest rates sooner rather than later.




The Pound is having tough times
The Pound is having tough times

The Pound Sterling is keeping balance against the USD as much as possible. The current quote for the instrument is 1.0800. The news released yesterday were rather puzzling. The Bank of England announced...

29 Sep 2022

EUR/USD: bears now target 0.9500
EUR/USD: bears now target 0.9500

EUR/USD drops for the seventh straight session and tests 0.9535. Below the 2022 low at 0.9535 comes the 0.9500 region. EUR/USD extends the leg lower to the proximity of 0.9530 earlier on Wednesday...

28 Sep 2022

Gold Shows Signs of Life, But Heads Towards Another Losing Month
Gold Shows Signs of Life, But Heads Towards Another Losing Month

The precious metal is largely considered as a hedge to inflation, but it has not confirmed this status during the current year. It did kick it off with a rally, but as the Fed begun hiking rates back in March...

27 Sep 2022

Penny Stocks: What Are They?
Penny Stocks: What Are They?

Locating penny stocks with buy ratings is getting more and more challenging. The markets become less adventurous as interest rates rise. That indicates that penny stocks, which are riskier by definition...

20 Sep 2022

Bitcoin and Ethereum: Inflation Brought Down The Prices
Bitcoin and Ethereum: Inflation Brought Down The Prices

Strong inflation brought down the price of bitcoin yesterday from $22,800 to the $20,000 support level. This morning, the price of Ethereum formed a new seven-day low at the $1550 level...

15 Sep 2022

Cooler USD & Stocks Higher Ahead of CPI
Cooler USD & Stocks Higher Ahead of CPI

USDIndex – Slips (108.00 tested) for a 5th straight day, lifting EUR & GBP. Fed Funds Futures back to 90% chance of 75 bp (third consecutive) hike...

14 Sep 2022

Editors' Picks

HFM information and reviews
IronFX information and reviews
FXCM information and reviews
NordFX information and reviews
Vantage information and reviews
FP Markets information and reviews
FP Markets

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.