US inflation numbers are going up
The US dollar is on the back foot during early Thursday trading, losing ground to other major currencies. Markets were already readjusting expectations following Fed chairman Jerome Powell’s declarations to a senate committee earlier in the week, where he used a tone that was perhaps less hawkish than some had expected. Added to this were yesterday’s US inflation numbers, which failed to surprise to the upside; once again, something that would have been on the wish list of many dollar bulls. With three rate hikes this year already priced into the value of the currency and improving prospects for the global economic recovery – we mustn’t forget the greenback tends to do well when global economies suffer – there may be some scope for further dollar weakness in the near-term.
Ricardo Evangelista – Senior Analyst, ActivTrades
Stocks slid lower almost everywhere on Thursday as chances of an accelerated hawkish switch from the Fed continue to weigh on global market sentiment. Despite Jerome Powell’s latest comments that indicated a hawkish pivot could take more time than initially expected, yesterday’s news that US inflation hit 7% in December revived concerns of a much quicker switch from the Fed. With US inflation hovering towards levels not seen since 1982, investors are now broadly expecting four rate hikes this year – with the first expected not later than March. However, as the direction of monetary policies becomes clearer, investors still struggle with one crucial question: how will the Fed manage to tackle rising price pressure without derailing the fragile post-pandemic economic recovery? That said, increasing numbers of market operators are now betting on a slower growth for 2022. Many investors have started looking for hedging solutions towards other asset classes like gold and silver where prices have already registered solid bullish accelerations, while cryptomarkets may also be used as a diversification tool on the mid-term basis.
Pierre Veyret– Technical analyst, ActivTrades
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