Daily Market Update

U.S. Dollar up again as inflation fears continue

September 13, 2022

The U.S. Dollar is erasing its losses from yesterday following the release of inflation figures in the U.S., suggesting prices are yet to calm down. 

Overview

Indeed, the Consumer Price Index numbers for August revealed an ongoing rise instead of a downfall. CPI for the month came in at 0.1% when a contraction was expected while growing by 0.6% when you exclude Food and Energy costs. As of now, yearly CPI is averaging 8.3%, only slightly lower than the previous 8.5% and higher than the estimated 8.1%. Tomorrow, we will see if suppliers are also feeling the pressure with Producer Price Index data.Naturally, equity markets are pointing downward with fresh expectations of more pain in prices to continue while the Fed has every intention to keep cooling off the economy with tight monetary policy. As of now, the average loss for peers is slightly above 1.0%. The optimism from yesterday across global markets certainly faded.

 

What to Watch Today…

  • No major economic events are scheduled for today

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EUR ⇓

The Euro fell this morning after a reaction to the inflationary gauges out of the U.S. showing that prices are still stubborn. Although the news of Ukrainian advances has encouraged an outlook for a better future, the energy crisis remains a thorn in the bigger economies of the Eurozone.

German CPI came in advancing as expected, but in Spain, the overall average keeps hitting records.  More importantly, confidence remains down for consumers following ZEW Surveys in Germany showing that people in the largest economy of the EU still see trouble ahead.

 

GBP ⇓

Sterling is also down based on America’s battle with higher prices and the suggestion that central banks are not even close to done when it comes to combatting all that ails the global economy. Equities have been looking for a reason to rise, but the most recent bump seems poorly advised considering that higher borrowing costs will continue cooling things down.

Today’s data for the U.K. focused on wages, which rose just as expected, but tomorrow’s CPI readings will show if prices are outdoing income by a lot. CPI YoY for the U.K. is expected at 10.0%.

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