There are signs that inflation has peaked in the US
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Yesterday (12 April), the US Bureau of Labor Statistics announced its Consumer Price Index (CPI) related data, which was a mixed bag of indicators. After excluding food and energy products, the month-on-month (MoM) and year-on-year (YoY) CPI were 0.3% and 6.5% respectively, which were lower than expectations. However, once food and energy products are factored in, the general CPI recorded a 8.5% increase, slightly higher than its forecast of 8.4%, indicating increase in energy prices has contributed a considerable portion of US inflation.
As a result, oil and energy prices are likely to dictate whether US inflation has reached its peak. Should oil prices continue to climb from banning Russian oil imports due the sanctions, the Organization of the Petroleum Exporting Countries (OPEC) has stated that its members are unlikely to fill the difference by increasing production. Since strategic oil reserves in the US and International Energy Agency (IEA) are limited, oil prices in the long term will depend on when, and whether the Russian invasion of Ukraine could reach a peaceful conclusion for oil and global supply chain to recover.
If inflation keeps on the rise, the US Federal Reserve may increase interest rates for the second time in the year by 50 bps. The US dollar continues to hold its ground against major currencies, EUR/USD slid to 1.0826, and GBP/USD closed at 1.2997 as the recent lackluster domestic figures failed to strengthen the British Pound against the US dollar. On the other hand, UK National Statistics will release a basket of production and consumption related data today (13 April). Current forecasts all point to an increase in price indices, i.e. inflation, with oil and energy prices playing a role here as well.
A strong US dollar led USD/CAD to rally and close at 1.2643, and the Bank of Canada will provide its latest monetary policy and interest rate decision today, with the market predicting a rate hike of 1.0%.
Meanwhile, the US 10-year Treasury yield was last down 6.1 basis points to 2.721%, its first decline in eight sessions. Gold prices gained ground and closed at 1,967, after reaching a high of 1,980. Whereas US stocks record falls between 0.14% and 0.23%, as the market anticipates the Fed will introduce monetary tightening policies to curb inflation.
In Shanghai, quarantine restrictions were easing, signaling a possible increase in oil consumption, and recovery in the global supply chain. Although facing western sanctions, Russia's 6% drop in March’s average oil output also pushed crude oil to a closing price of 100.99 per barrel. The rally in commodity prices allowed the Australian currency to close at 0.7459, with a near week high of 0.7488.
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EUR/USD ⬇️
GBP/USD ⬇️
AUD/USD ⬆️
USD/CAD ⬆️
XAU ⬆️
WTI ⬆️
Yesterday (12 April), the US Bureau of Labor Statistics announced its Consumer Price Index (CPI) related data, which was a mixed bag of indicators. After excluding food and energy products, the month-on-month (MoM) and year-on-year (YoY) CPI were 0.3% and 6.5% respectively, which were lower than expectations. However, once food and energy products are factored in, the general CPI recorded a 8.5% increase, slightly higher than its forecast of 8.4%, indicating increase in energy prices has contributed a considerable portion of US inflation.
As a result, oil and energy prices are likely to dictate whether US inflation has reached its peak. Should oil prices continue to climb from banning Russian oil imports due the sanctions, the Organization of the Petroleum Exporting Countries (OPEC) has stated that its members are unlikely to fill the difference by increasing production. Since strategic oil reserves in the US and International Energy Agency (IEA) are limited, oil prices in the long term will depend on when, and whether the Russian invasion of Ukraine could reach a peaceful conclusion for oil and global supply chain to recover.
If inflation keeps on the rise, the US Federal Reserve may increase interest rates for the second time in the year by 50 bps. The US dollar continues to hold its ground against major currencies, EUR/USD slid to 1.0826, and GBP/USD closed at 1.2997 as the recent lackluster domestic figures failed to strengthen the British Pound against the US dollar. On the other hand, UK National Statistics will release a basket of production and consumption related data today (13 April). Current forecasts all point to an increase in price indices, i.e. inflation, with oil and energy prices playing a role here as well.
A strong US dollar led USD/CAD to rally and close at 1.2643, and the Bank of Canada will provide its latest monetary policy and interest rate decision today, with the market predicting a rate hike of 1.0%.
Meanwhile, the US 10-year Treasury yield was last down 6.1 basis points to 2.721%, its first decline in eight sessions. Gold prices gained ground and closed at 1,967, after reaching a high of 1,980. Whereas US stocks record falls between 0.14% and 0.23%, as the market anticipates the Fed will introduce monetary tightening policies to curb inflation.
In Shanghai, quarantine restrictions were easing, signaling a possible increase in oil consumption, and recovery in the global supply chain. Although facing western sanctions, Russia's 6% drop in March’s average oil output also pushed crude oil to a closing price of 100.99 per barrel. The rally in commodity prices allowed the Australian currency to close at 0.7459, with a near week high of 0.7488.
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