Spreadex Market Update
US Inflation Drops Sharply in October
US Inflation Drops Sharply in October – Traders Now Looking for Smaller December Hike
The US Dollar crashed to its lowest level since mid-August on the back of yesterday’s US CPI release. The data showed that consumer prices fell back to 7.7%, annually, last month from 8.2% prior. This was below the 7.7% the market was looking for and has consequently seen market pricing for the December FOMC swinging in favour of a smaller 50bps hike. While still well above the Fed’s 2% target, the half-point drop has been taken as a sign that inflation has likely peaked for now in the US.
Key Factors for Today
- USD drops as October inflation shed half a point – December FOMC pricing falls
- Equities rally as USD drops and China relaxes quarantine rules
- AUD leading in FX as risk back drop improves – safe-havens fall
- Oil and metals sharply higher amidst USD unwind
Coming Up
- USD – UoM Consumer sentiment
- GBP – BOE’s Haskel speaks
- CHF – SNB’s Jordan speaks
Equities Rally As US Inflation Drops
Equities markets are enjoying some of their best gains in months on the back of the sell-off in USD. We’ve seen indices across the board breaking out today with the S&P extending gains on the back of yesterday’s roughly 6% rally, the largest one-day gain in the index since March 2020.
China Relaxes Quarantine Rules
Along with the drop in the US Dollar, risk sentiment has been bolstered into the end of the week by news that China has further relaxed some of its COVID restrictions. The Chinese government announced that it has reduced the quarantine time for arrivals into the country, spurring hopes for further dismantling of restrictions in coming months.
AUD Boosted By Better Risk Sentiment
In FX, the sharp drop in the US Dollar over the last 24 hours has fuelled a revival for risk currencies with the Aussie leading the way across the European open on Friday. AUDUSD is up around 5% on yesterday’s opening prices and looks poised for further gains as late shorts continue to unwind here. With risk markets rallying amidst a weaker USD and China relaxing some of its COVID restrictions, safe-havens have seen heavily reduced demand with JPY the weakest currency today.
Metals & Oil Rally As USD Drops
In the metals and commodities space, both gold and silver were seen breaking out yesterday as the US Dollar came off. With traders repricing the December FOMC in favour of a smaller hike, metals have room to rally further here. Crude prices have turned higher now also. News of China relaxing its COVID restrictions has lifted the demand outlook for oil. Paving the way for higher prices in the near-term.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
