IFX Market Report: Thursday 11th November 2021

October’s US Inflation Rate came as a massive boost to the Greenback yesterday, helping the currency end a 3-day streak of losses. The YoY figure climbed to 6.2% last month “as surging costs for food, gas and housing left Americans grappling with the highest inflation rate since 1990”. While this release was welcomed by the Dollar itself, inflation is “eroding the strong gains in wages and salaries that have flowed to America’s workers in recent months” following the easing of COVID-19 restrictions in most states. This in turn will most likely create a plethora of “political headaches for the Biden administration and congressional Democrats” and intensify the “pressure on the Federal Reserve as it considers how fast to withdraw its efforts to boost the economy”. After months of insisting inflation was “transitory”, last week Fed Chair Jerome Powell “acknowledged that higher prices could last well into next summer”.

GBPUSD made a loss on Wednesday as the Dollar made a rebound. Cable opened the session at 1.3536 and closed the day at 1.3468.

GBPEUR also slumped yesterday. The pair opened at 1.1706 and finished at 1.1693.

The next major release for the Dollar will be tomorrow’s November preliminary Michigan Consumer Sentiment. November’s figure is expected at 72.4, marking a 0.7 increase from last months 71.7. The Index focuses on three areas: “how consumers view prospects for their own financial situation, how they view prospects for the general economy over the near term, and their view of prospects for the economy over the long term”. Given the drastic rise of consumer prices in the US, economist’s will be analysing this data closely.

After trading in a very tight range of late, EURUSD faced significant downside pressures as the Dollar gained momentum on Wednesday. The pair started the session at 1.1563 and closed at 1.1518.

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