Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Inflation Concerns Set To Take Centre Stage This Week

By CMC Markets (Michael Hewson)Market OverviewSep 13, 2021 07:03
Inflation Concerns Set To Take Centre Stage This Week
By CMC Markets (Michael Hewson)   |  Sep 13, 2021 07:03
Saved. See Saved Items.
This article has already been saved in your Saved Items

Since the disappointing US jobs report at the beginning of the month, confidence in the broader recovery story has started to ebb away, and ergo so has confidence in the outlook for stock markets more generally.

The S&P 500 posted its lowest close in the last two weeks, while markets in Europe have lost ground for two weeks in a row, while the Nasdaq also appears to be starting to look a little top heavy, although in the bigger scheme of things the declines of the past four days have been very modest.

For US investors the main concern appears to be a slowing economy coming at a time when inflation appears to be showing little sign of slowing down, and after US PPI for August saw yet another record high in data released at the end of last week.

With the US Federal Reserve due to meet next week, and the narrative clearly moving towards a tapering of asset purchases sooner rather than later, there appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe, with the resultant rise in yields and rebound in the US Dollar.

While factory gate prices appear to be showing no sign of slowing down, in the US, as well as China where authorities released strategic reserves in an attempt to keep a lid on crude oil prices, after PPI hit a 13 year high, there is a fear that rising CPI will continue to heap pressure on consumer spending, and act as an additional drag on economic growth.

This correlation could see further confirmation this week with the latest US and UK CPI and retail sales numbers for August. In July both UK and US consumer prices saw a pause as some base effects dropped out of the headline numbers, and while there is some expectation that this might continue in August, this appears to be more of a hope than anything else, and doesn’t appear to be being reflected in US 10-Year yields, which have risen for three weeks in succession, posting its highest weekly close since mid-July.

The decline in confidence also appears to be hitting US consumer confidence and retail sales, which both fell back in July, and with consumer confidence falling further in August, we could see a similar decline in August retail sales as well.

It’s been a slightly different story for markets in Asia which have seen a pick up in the last two weeks, however the recovery being seen in the Nikkei 225 and Chinese markets are merely pullbacks from the declines that we’ve been seeing over the last three months, and concerns still remain there as Chinese regulators mull crackdowns on various sectors.

Today’s European market open looks set to carry on from the weakness that we saw at the end of last week, with a lower open as Asia markets slip back on reports that Chinese authorities want to break up Alipay, and separate it from Ant Group's (HK:6688) wider business.

EURUSD – holding above support at the 1.1800 area and 50-day MA for now, with a break below opening up the potential for a move towards 1.1750 and previous lows at 1.1660. Resistance remains at the 1.1910 area.

GBPUSD – the pound was rebuffed at the 1.3900 area last week, but found support at the 1.3725 area. As long as we hold above trend line support from the August lows at 1.3750 then the upside potential remains intact. A move through 1.3900 targets 1.4000.

EURGBP – the failure at the 0.8610 area last week saw a retest of the 0.8520 level. We need to recover back through 0.8560 to retarget 0.8610. Below 0.8520 retargets 0.8480.

USDJPY – finding resistance at the 110.50, we could see a retest of the 109.10 area and trend line support from the April lows. Above 110.50 targets 111.00.

"DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. "

Original Post

Inflation Concerns Set To Take Centre Stage This Week

Related Articles

Inflation Concerns Set To Take Centre Stage This Week

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’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
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.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
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'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
Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The inherent concept of such investments means that they are not suitable for the investor seeking income from such investments, and are only suitable for those who have the required experience and understand the market risks. You should carefully consider your investment objectives, level of experience, and seek advice from an independent financial advisor if you have any doubts.
Continue with Google
Sign up with Email