FXTM information and reviews
FXTM
95%
OctaFX information and reviews
OctaFX
94%
XM information and reviews
XM
93%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
91%
HFM information and reviews
HFM
89%

US inflation may have peaked, dollar rally cools


12 August 2021

The rate of inflation in the United States remained at a 13-year high in July according to the consumer price index out yesterday. But there was good news for both consumers and policymakers as price pressures for some of the categories such as used cars and airfares that had surged in recent months appeared to be easing.

CPI rose 0.5% month-on-month and 5.4% annually in July, both broadly in line with expectations. The core rate moderated from 4.5% to 4.3% y/y, in a further sign that price growth may have peaked already as some of the effects from last year’s lockdowns and subsequent reopening, which sparked massive supply-chain issues and unleashed pent-up demand, are subsiding.

However, even if that is the case, there are still plenty of inflationary forces at play that are unlikely to disappear overnight and that raises the question of how quickly inflation will fall back towards the Fed’s 2% objective.

The Fed’s more hawkish policymakers have been getting itchy of late. The Kansas City Fed’s George and Dallas Fed’s Kaplan were the latest to call or repeat the need for the monthly pace of asset purchases to be pared back. However, others are still cautious, with Richmond Fed President Thomas Barkin joining Evans in suggesting that it may take a few more months for the conditions for tapering to be met. The apparent splits within the FOMC are casting some uncertainty over the likelihood of the Fed being able to send clear tapering signals at the Jackson Hole conference that’s coming up later this month.

Dollar steady, euro fights back, pound unmoved by GDP jump

Nevertheless, there can be no doubt that tapering is on the cards at some point over the coming months, hence why there was only a modest retreat in Treasury yields and the US dollar after the CPI data. The 10-year yield has fallen slightly below 1.35% but is still sharply above where it was a week ago.

The dollar, meanwhile, remains bullish despite this minor stumble. The pound, aussie and kiwi were all back under pressure on Thursday, though the euro and loonie were attempting to edge up versus the greenback. The euro seems to be attracting some buyers after managing to avoid a drop below its March trough of $1.1702 on Wednesday.

There was little reaction in sterling to UK GDP numbers that showed the British economy expanded by a solid 4.8% in the second quarter, taking the annual growth rate to 22.2%. US producer prices and weekly jobless claims will be watched later in the day. But unless there are any huge surprises, the dollar is unlikely to be spurred much by the data.

In commodities, there was some much needed reprieve for gold as the selloff in Treasuries cooled and yields came off their highs. The precious metal continued to climb today, reaching the $1,755/oz vicinity. But oil prices were struggling a bit after the White House yesterday called on OPEC producers to pump more oil to ease rising fuel costs.

Yet more records for Wall Street

On Wall Street, it was another record session on Wednesday as Congress made more progress towards fulfilling President Biden’s goal of a once-in-a-generation infrastructure spending spree. The Senate approved a budget resolution that would allow the passage of a $3.5 trillion spending plan.

However, there are already signs of divisions among Democrats so the final price tag of the bill will likely be lower. But investors are betting that a sizeable package will get through and the prospect of continued fiscal support for the American economy is offsetting immediate anxieties about reduced monetary stimulus over the next few years.

Once again, tech stocks lagged yesterday, pulling the Nasdaq Composite down by 0.2%. But the Dow Jones and S&P 500 posted yet another record close, with Dow constituents leading the way. In Europe, shares were mostly in the green today, but Delta fears weighed slightly on Asian equities as regional virus numbers and tighter restrictions continued to worry markets.

US stock futures were more or less flat on Thursday, with Disney earnings (due after the market close) in focus for traders.

By XM.com

#source

Share: Tweet this or Share on Facebook


Related

XAU/USD remains on the defensive around $1,925 ahead of US PCE
XAU/USD remains on the defensive around $1,925 ahead of US PCE

Gold price remains on the defensive for the second straight day amid modest US Dollar strength. Thursday’s upbeat US macro data fuels hawkish Fed expectations...

27 Jan 2023

XAU/USD retreats from multi-month top amid modest USD recovery, ahead of US GDP
XAU/USD retreats from multi-month top amid modest USD recovery, ahead of US GDP

Gold price pulls away from a fresh multi-month top amid a modest US Dollar strength. Bets for smaller rate hikes by Federal Reserve, recession fears should help limit losses...

26 Jan 2023

Microsoft: Still Trapped Within Descending Channel
Microsoft: Still Trapped Within Descending Channel

Microsoft Corp., an American multinational technology conglomerate currently ranked the third largest company by market capitalization ($1.728T) which actively engages...

24 Jan 2023

Same story new week
Same story new week

Chinese New Year celebrations – many centres are closed in Asia. Treasuries sagged to end on a bearish week. USDIndex at 101.30 low as the market continued...

23 Jan 2023

EUR is stuck consolidating
EUR is stuck consolidating

EURUSD is going to consolidate. The current quote is 1.0810. In the nearest future the EUR might experience some local pressure because the weather in Europe has changed...

20 Jan 2023

EURGBP Fails To Break 0.89
EURGBP Fails To Break 0.89

In today’s European session, Germany’s final CPI rate for December registered 8.6% on an annual basis, in line with market expectations and the previous value...

18 Jan 2023


Editors' Picks

FXCM information and reviews
FXCM
87%
ActivTrades information and reviews
ActivTrades
86%
RoboForex information and reviews
RoboForex
85%
MultiBank Group information and reviews
MultiBank Group
84%
Libertex information and reviews
Libertex
83%
Vantage information and reviews
Vantage
83%

© 2006-2023 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.