Forex Today: US Inflation Hits 13-Year High

Adam Lemon

New monthly US inflation (CPI) data again exceeds forecasts to hit long-term high rate.

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  • Month-on-month U.S. CPI data was released yesterday showing inflation running at an annualized rate of 5.4%, up from last month’s 5%. This was higher than had been widely expected and had the effect of knocking stock markets and boosting the US dollar somewhat. There is now increased sentiment that the Fed will have to take a more hawkish approach to monetary policy sooner rather than later.
  • In the Forex market, the NZD was boosted by the RBNZ’s announcement that it would end its QE program this month, as a rate hike is now expected even sooner (next month). The RBNZ left its cash rate unchanged today.
  • The EUR/USD currency pair fell strongly yesterday on above-average volatility to a new 50-day low price, suggesting that the currency pair is likely to see still lower prices over the coming days, including today, although the price rose throughout almost all of the Asian session.
  • The 10-year US treasury yield fell slightly to 1.4%.
  • Global stock markets are mostly a little lower today, after the S&P 500 Index briefly traded at a new record high price yesterday.
  • Today will see several key data points: UK inflation, US PPI, the Bank of Canada’s monthly policy release, testimony by the Chair of the Fed before the US Congress, and Australian employment data.
  • Last week saw a third consecutive weekly rise in global new confirmed coronavirus cases, suggesting that the pandemic is advancing again due to the spread of the more highly infectious Delta (Indian) variant.
  • It is estimated that 25.4% of the world’s population has received at least one vaccination against the novel coronavirus.
  • Total confirmed new coronavirus cases worldwide stand at over 188.6 million with an average case fatality rate of 2.16%.
  • The fastest progression in terms of immunizing a population against the coronavirus in all but the smallest states has been in Singapore, Iceland, Malta, Bermuda, Bahrain, Denmark, Finland, Mongolia, Kuwait, Bhutan, Israel, Chile, Uruguay, and Canada, which have given at least one shot to between 84% and 63% of their respective populations. However, even countries with high vaccination rates are seeing increases in new cases. For most of the world, a vaccine still remains distant. The pace of vaccination in the European Union, which now has immunized 54% of its population, has picked up significantly. In the U.S., 55% of the population has been vaccinated.
  • The latest data suggests that coronavirus vaccines are only about 65% in effective in preventing infection by the delta (Indian) variant, although still more than 90% effective in preventing serious illness. This may change as more data is analyzed from countries with high rates of vaccination.
  • The rate of new coronavirus infections appears to now be increasing most quickly in Algeria, Andorra, Bangladesh, Belarus, Burma, Cuba, Cyprus, Finland, Fiji, Georgia, Greece, Guatemala, Indonesia, Iran, Iraq, Japan, South Korea, Laos, Malaysia, Malta, Mexico, Morocco, Netherlands, Portugal, Pakistan, Russia, Senegal, Spain, and the United Kingdom.
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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