This week’s CPI data may push the Greenback higher.Įuro Week Ahead Forecast: EUR/USD Bounce May Be Over AlreadyĮUR/USD was relatively stable last week but it is still hard to see a stronger recovery unless the European Central Bank reverses its position that a tightening of Eurozone monetary policy is not necessary. The US Dollar index closed higher for the sixth consecutive week as fundamental tailwinds buoy the Greenback. US Dollar Fundamental Forecast: DXY Primed Ahead of CPI Data Get My Guide US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD Fundamental Forecasts: Meanwhile, Chinese stocks that are listed on US exchanges continue bracing for volatility on delisting concerns. Both central banks are not expected to adjust benchmark lending rates, so investors will be tuning in to gauge their outlook for 2022 and how policy could shape up. For USD/CAD investors, the Bank of Canada is also on tap.
Outside of the US, AUD/USD traders will be eyeing the Reserve Bank of Australia’s last interest rate decision of the year. Further upside surprise could increase hawkish Fed policy bets for 2022, risking volatility in markets. The core reading, which excludes energy and food items, is estimated at 4.9% y/y from 4.6% prior. That would be the highest rate in almost 40 years. Headline inflation is expected at a whopping 6.8% y/y in November, up from 6.2% in October. Speaking of inflation, the US will release the next CPI report on December 10 th. This follows persistently elevated inflation readings in the world’s largest economy. Policymakers at the central bank have also expressed the possibility for tapering quantitative easing faster than anticipated. This past week, Chair Jerome Powell retired the word ‘transitory’ from describing inflation estimates. Gold prices managed to hold some ground, capitalizing on a further decline in longer-term Treasury yields.ĭriving the worrying mood in sentiment appears to be a combination of the emerging Omicron Covid-19 variant and the Federal Reserve’s hawkish pivot. Taking a look at commodities, growth-linked crude oil prices softened, extending a bear market. The similarly-behaving Japanese Yen and Swiss Franc also outperformed. Risk aversion meant that forex traders flocked into the safety of the highly liquid US Dollar, which soared against the Australian and New Zealand Dollars. Conditions were relatively tame in Europe, with the FTSE 100 gaining 0.39% as the DAX 40 fell 0.67%. In the Asia-Pacific region, the Nikkei 225, Hang Seng and ASX 200 dropped 1.98%, 1.27% and 2.20% respectively. The VIX market ‘fear gauge’ closed at its highest since February. On Wall Street, Dow Jones, S&P 500 and Nasdaq futures slipped 0.89%, 1.42% and 2.25% respectively. Global market mood soured last week, extending a slump since November.