Forex Today: 7% US Inflation Hits US Dollar

US inflation slightly overshot expectations yesterday at an annualized rate of 7%, hitting the dollar and prompting talk of a fourth rate hike in 2022.

  • US CPI (inflation) data released yesterday showed a month on month increase of 0.5%, higher than the 0.4% which had been expected. This equates to an annualized rate of 7.0%, the highest seen since 1982 and an increase from last month’s rate of 6.8%. The release’s major effect on the market was to confirm the selloff in the US dollar, which is continuing its fall against almost every other currency, especially the commodity currencies such as CAD and AUD. Precious metals, especially gold, have also gained firmly against the greenback.

  • FOMC member Bullard has made the following public comments: four rate hikes in 2022 now seem to be likely starting in March, and the job market is as tight as anyone has ever seen it. He is pushing a hawkish line, yet the dollar still declines.
  • Stock markets have reacted little to the US CPI data.
  • Bitcoin seems to have found support at $40k and Ethereum at $3k. These are bullish signs for these two cryptocurrencies in particular and the crypto market in general.
  • In the Forex market, the Canadian and Australian dollars are especially strong while the US dollar is clearly the weakest currency. The British pound and even the euro also look strong against the USD. This gives Forex traders a clear direction in the market today as there are no high-impact releases likely to shift prevailing sentiment. However, traders should not the US Dollar Index is currently sitting at an area of potential key support.
  • Daily new coronavirus cases soared to a new global record yesterday, with more than 3 million new cases recorded for the first time. More than one quarter of these confirmed cases are in the USA. The World Health Organization believes 50% of Europeans will become infected over the coming weeks.
  • Data suggests that the globally rampant omicron coronavirus variant, while considerably more infectious, has notably milder effects than previous coronavirus strains, with an estimated 70% reduction in the probability of hospitalization. This is potentially very good news for both health and economy. Pfizer have announced they plan to have an omicron-specific vaccine ready in March.
  • It is estimated that 59.4% of the world’s population has received at least one dose of a coronavirus vaccination.
  • Total confirmed new coronavirus cases worldwide stand at over 317.6 million with an average case fatality rate of 1.74%.
  • The rate of new coronavirus infections appears to now be increasing most quickly in Albania, Algeria, Andorra, Argentina, Australia, Austria, Bahamas, Bahrain, Barbados, Belgium, Belize, Bhutan, Bolivia, Bosnia, Brazil, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Cuba, Dominican Republic, Estonia, Fiji, Finland, France, Georgia, Guatemala, Hungary, India, Israel, Italy, Japan, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Mali, Mexico, Moldova, Monaco, Montenegro, Mongolia, Morocco, Netherlands, North Macedonia, Norway, Pakistan, Panama, Peru, Philippines, Portugal, Qatar, Romania, Saudi Arabia, Senegal, Serbia, Singapore, Slovenia, Sweden, Switzerland, Thailand, Tunisia, Turkey, the UAE, Uruguay, and the USA.
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.