Soft US headline inflation won’t be enough! | MarketTalk: What’s up today? | Swissquote

Show notes

The US dollar extended losses after breaking a long-term ascending channel base yesterday. The British pound rallied on yet another stronger than expected wages growth data released yesterday morning. The USDJPY slipped below 140 and the USDCAD is testing the 1.32 support.
The US inflation data will determine whether the US dollar should further depreciate or is it time for correction. The consumer price index in the US is expected to have fallen to 3.1% from 4% printed a month earlier. But unfortunately, it won’t be enough to prevent the Fed from further rate hikes, because the further fall in headline inflation to 3% is due to a favourable base effect on energy prices, while core inflation is expected to remain sticky at around the 5% mark - still more than twice the Federal Reserve’s (Fed) 2% policy target.
Plus, the rebound in oil prices hints that the risk of an uptick in headline inflation is building stronger for the coming months. The barrel of American crude rallied past the 100-DMA yesterday and is flirting with the $75pb level this morning.
Elsewhere, the Reserve Bank of New Zealand (RBNZ) kept its policy rate unchanged at 5.5%. Later today, the Bank of Canada (BoC) is expected to announce a final 25bp hike in this tightening cycle.
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