Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

FX Market Trading Cautiously Ahead Of U.S. CPI

By Kathy LienCurrenciesDec 09, 2021 21:19
uk.investing.com/analysis/fx-market-trading-cautiously-ahead-of-us-cpi-200504593
FX Market Trading Cautiously Ahead Of U.S. CPI
By Kathy Lien   |  Dec 09, 2021 21:19
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
The U.S. dollar traded higher against all of the major currencies Thursday with the exception of the Japanese yen. The Federal Reserve meets next week and faster removal of policy accommodation is widely anticipated. Today’s jobless claims report confirms that the labor market is blazing hot. The number of new jobless claims dropped to 185,000 last week, its lowest level since 1969. Read that again – 1969. That is a 52-year low. Weekly claims can be very volatile, but there’s been an irrefutable downtrend that reflects the tightness of the labor market. Employers are reluctant to lay off workers when there’s a shortage of willing applicants, which can be problem for wage growth. 
 
U.S. inflation numbers will be released tomorrow and economists are looking for the monthly CPI growth rate to slow and the annualized rate to accelerate. Given Federal Reserve Chairman Jerome Powell’s recent comment that it is time to retire the word “transitory” from the central bank's inflation description, prices will rise at its fastest pace in 30 years with a good chance of an upside beat in monthly CPI. Gas prices were high throughout the month of November, with many Americans reporting an increase in the costs of Thanksgiving dinner. Traders are cautiously buying U.S. dollars and selling stocks ahead of Friday’s CPI report. If inflation is stronger than expected, rate hike bets will increase, driving the U.S. dollar higher against euro, sterling and the Canadian dollar, while also taking stocks lower. 
 
All three of the commodity currencies traded lower. The Canadian dollar extended its slide after the Bank of Canada said gasoline prices have recently declined. The BoC expects CPI to remain elevated into next year and ease back to around 2% in the second half of the year. The rising dollar also drove oil prices lower, adding pressure on the loonie. Softer Chinese inflation data drove the Australian and New Zealand dollars lower. Tonight’s New Zealand PMI report will be in focus for NZD.
 
The rising U.S. dollar also took EUR/USD below 1.1300. While a smaller trade surplus for Germany may have contributed to the move, the real worry is that Eurozone nations will follow the U.K in imposing new restrictions. The daily case count in the U.K. is at its highest level since January. That was the same month that new cases hit a record high of 68,000. Cases in Germany hit record highs this month, and yesterday it reported the highest daily COVID deaths since February. Calls are growing for restrictions ahead of Christmas holidays. 
 
Tomorrow’s German CPI report is not expected to have a significant impact on the euro. Sterling, on the other hand, could be affected by monthly GDP and industrial production numbers – both of which are expected to be stronger. The Bank of England meets next week and investors will be eager to see if Omicron has affected its plans to remove stimulus.  
FX Market Trading Cautiously Ahead Of U.S. CPI
 

Related Articles

ING Economic and Financial Analysis
FX Daily: Dollar Correction Extends By ING Economic and Financial Analysis - Dec 01, 2022

USD: Overreaction? The US dollar came off sharply late yesterday on comments from Federal Reserve Chairman Jerome Powell which signaled that December would probably be the...

Shane Neagle
Has the U.S. Dollar Officially Peaked? By Shane Neagle - Nov 29, 2022

The U.S. dollar is trading near multi-month lows against its major counterparts on expectations the Federal Reserve may slow down its hiking campaign. The pullback in the dollar...

FX Market Trading Cautiously Ahead Of U.S. CPI

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Kwadwo Adjapong
Kwadwo Adjapong Dec 09, 2021 23:00
Saved. See Saved Items.
This comment has already been saved in your Saved Items
great insights
Hugo Gonzalez Martin
Hugo Gonzalez Martin Dec 09, 2021 22:40
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nice post
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email