Market Analytics and Considerations
Key Notes
Amid caution eve of the publication of the most recent data on consumer inflation in the US and the last Federal Reserve meeting of the year, the US dollar dipped slightly in early European trade on Tuesday.
The Dollar Index, which compares the dollar to a basket of six other currencies, decreased 0.3% to 104.448 at 3:00 ET (08:00 GMT).
At 13:30 GMT, the U.S. consumer price index for November is scheduled to be released. It is anticipated to grow 7.3% from the same month last year, compared to a rise of 7.7% in October, or a 0.3% increase for the month.
Contrasting with the 6.3% increase in October, the core CPI—which eliminates food and fuel—is forecast to increase by 0.3% for the month and 6.1% from the previous year.
The index fell further from the 20-year high of 114.78 recorded in late September as a result of a modest unexpected to the south last month, which led to significant dollar dumping on the assumption that inflation had peaked. Because of this, there is caution in advance of today’s publication.
A 2 policy-setting conference of the U.S. Federal Reserve will also begin late on Tuesday and end on Wednesday. The regulators are anticipated to agree to a 50 basis point increase in the funds rate, slowing the pace after 4 successive 75 bps increases.
Prior to the European Central Bank meeting scheduled for Thursday, which is anticipated to result in a raise of 50 basis points as the central bank attempts to control inflation that is still at excessive concentrations, the EUR/USD appreciated 0.2% to 1.0554, taking advantage of the weaker dollar.
The final German CPI decreased by 0.5% on a monthly basis in November, but it still constituted a 10.0% annual growth rate for the leading economy in the Eurozone, which is 5 times greater than ECB’s intermediate aim.
GBP/USD climbed 0.1% to 1.2286 following news that Britain’s rate of unemployment grew to 3.7% in the three months ending in October. However, due to the country’s tight labor market, basic salaries rose by the most since records have been kept, with the exception of the time of the coronavirus outbreak.
The Bank of England meets on Thursday and is anticipated to increase interest rates by 50 basis points once again, with the increase in wages contributing to rising inflation in the nation.
In anticipation of the release of retail sales and industrial production numbers later this week, which is anticipated to further highlight the potential cost of COVID-19 shut downs even as the country starts loosening some restrictions, USD/JPY fell 0.1% to 137.48, the risk-sensitive AUD/USD rose 0.5% to 0.6776, and USD/CNY traded largely flat at 6.9777.
