Forex Today: UK Inflation Hits 7.0%

Most of the developed world’s economy remains in a high inflation environment requiring rate hikes from central banks.

  • Following US inflation hitting a 40-year high of 8.5% but not exceeding expectations for the first time in months, UK inflation data released yesterday showed the CPI coming in higher than expected, at an annualized rate of 7.0%, which is a new 30-year high. This increases the likelihood of strong rate hikes from the Bank of England in the near future. The British Pound rallied significantly after the release, but this seemed to be due mostly to a declining US Dollar.
  • The Bank of Canada hiked its overnight rate yesterday by 0.50% to a new rate of 1.0%. The Canadian Dollar strengthened after the hike.

  • US PPI data came in higher than expected, showing an annualized increase above 11%, which is an all-time record suggesting strong inflationary pressure.
  • In the Forex market, the US Dollar has begun to sell off firmly after the US Dollar Index was held by key overhead resistance. The US Dollar is now the weakest major currency while the British Pound, the Euro, and Canadian Dollar are clearly the strongest. These price movements are counter to long-term trends.
  • The European Central Bank will be releasing its main refinancing rate and monetary policy report today.
  • Australian employment data came in weaker than expected, showing the unemployment rate rising from 3.9% to 4.0%.
  • The Monetary Authority of Singapore has tightened its monetary policy for the third time in six months, in an effort to dampen rising inflation.
  • Expectations are growing that the People’s Bank of China will cut its interest rate soon, in a divergent policy to most developed economies, which are tightening rates. This has helped boost global stock markets during the Asian session.
  • Gold rose firmly yesterday for the fifth consecutive day.
  • Agricultural commodities mostly rose during yesterday’s session, with cotton and corn reaching new highs.
  • There will be a release of US retail sales data today.
  • Daily new coronavirus cases globally fell last week for the third consecutive week.
  • It is estimated that 64.8% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 6.4% of the global population is known to have contracted the virus at some stage.
  • Total confirmed new coronavirus cases worldwide stand at over 502.1 million with an average case fatality rate of 1.24%.
  • The rate of new coronavirus infections appears to now be increasing only in Barbados, Bhutan, China,  and Taiwan.
  • A hard testing lockdown continues into its third week in Shanghai, China but will begin to be eased in some areas. It is causing some supply chain disruption globally.
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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