Tuesday, December 6, 2022
HomeCrypto CurrencyForexUS annual inflation at 40-year highs

US annual inflation at 40-year highs

In at this time’s market commentary: 

  • US annual inflation heats as much as 40-year highs in February 
  • USD strengthens on fee hike expectations 
  • EUR weakens amid geopolitical fallout
  • Oil market volatility prevails 

US inflation rose to 7.9 p.c in February on a yearly foundation elevated primarily by gas costs, mentioned the US Bureau of Labour Statistics. 

USD bulls picked up steam because the forex strengthened on expectations that the Federal Reserve will hike key interest-rate steering within the close to time period.  In the meantime, US inventory markets shed factors on the prospect that rate of interest hikes will make borrowing and funding dearer later this yr. On the brighter aspect, if interest-rate hikes do materialise, the banking sector may obtain a lift within the short-to-medium time period.  

Ought to the USD proceed to understand in opposition to its counterparts, costs for US exports might observe comparable rises. Items resembling prescribed drugs, semiconductors and fossil gas exports are more likely to develop into dearer within the medium time period, doubtlessly including to inflationary pressures.  

The EUR declined in opposition to the USD in a single day as geopolitical woes in Europe weighed on sentiment and buyers priced within the ECB’s sign that it’s going to start tapering QE by the third quarter.  

WTI Crude Oil moved down from five-year highs seen earlier this week and volatility is anticipated to prevail given the geostrategic dangers centered round one of many world’s largest crude oil producers – Russia.  

Because the USD rose, Gold was off its earlier highs. Edgy market sentiment may spur extra safe-haven shopping for if there are added geopolitical pressures and information headlines concerning the battle on Europe’s doorstep.   

The VIX index seems to be on the rise as volatility within the international inventory markets is a prevailing theme over the quick time period. On account of geopolitical stressors, investor sentiment wrapped up this week with a deal with safe-haven property to hedge market dangers. 

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