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Oil dips nearly 1%, reversing gains after bearish U.S. economic data

 

“Make every detail perfect and limit the number of details to perfect.” — Jack Dorsey

 

 

 HEADLINES

 

 

  • Dollar rallies against euro, yen after surprisingly firm U.S. consumer prices
  • Gold dips as dollar gains on sharp rate-hike bets after U.S. CPI data
  • Oil dips nearly 1%, reversing gains after bearish U.S. economic data
  • Dow falls 1,100 points, heads for worst day since May as Wall Street rout intensifies
  • Inflation is up 8.3% since last year—and more Fed rate hikes are likely looming
  • GBP/USD could plummet to 1.0520 if 1.1409/1.1350 breaks – Credit Suisse
  • GBPJPY Near Term: Downside favored

 

 

Dollar rallies against euro, yen after surprisingly firm U.S. consumer prices

 

The dollar jumped against the yen, euro and other currencies on Tuesday after stronger-than-expected U.S. inflation data, which suggested the Federal Reserve may need to stay aggressive in raising interest rates.

The dollar index , which tracks the greenback against six peers, was up 1.1% at 109.39, heading back toward last week's two-decade peak of 110.79. The index turned positive after the data release.

The euro , pound and yen all declined, with the euro last down 1% versus the greenback to $1.0016, after hitting a nearly one-month high of $1.0198 in the previous session.

 

 

COMMODITIES

 

 

Gold dips as dollar gains on sharp rate-hike bets after U.S. CPI data

 

Gold prices fell more than 1% as the dollar jumped after an unexpected rise in August consumer prices cemented bets for aggressive rate hikes from the U.S. Federal Reserve.

Spot gold prices fell 1.1% to $1,705.94 per ounce by 11:04 a.m. ET (1504 GMT).

U.S. gold futures fell 1.3% to $1,717.30.

 

 

ENERGY

 

 

Oil dips nearly 1%, reversing gains after bearish U.S. economic data

 

Oil prices ended nearly 1% lower on Tuesday, reversing earlier gains as U.S. consumer prices unexpectedly rose in August, giving cover for the U.S. Federal Reserve to deliver another hefty interest rate increase next week.

Brent crude for November delivery settled 83 cents lower at $93.17 a barrel with a 0.9% loss, after trading between $95.53 and $91.05. U.S. October crude futures closed down 47 cents, or 0.5%, at $87.31, after touching a high of $89.31 and low of $85.06.

The consumer price index gained 0.1% last month after being unchanged in July, the U.S. Labor Department said. Economists polled by Reuters had forecast a 0.1% fall.

Fed officials are set to meet next Tuesday and Wednesday, with inflation way above the U.S. central bank's 2% target.

 

 

STOCKS

 

 

Dow falls 1,100 points, heads for worst day since May as Wall Street rout intensifies

 

Stocks fell sharply on Tuesday after a key August inflation report came in hotter than expected, hurting investor optimism for cooling prices and a less aggressive Federal Reserve.

The Dow Jones Industrial Average slid 1,105 points, or 3.4%. The S&P 500 dropped about 3.8%, and the Nasdaq Composite sank 4.6%. More than 490 stocks in the S&P 500 fell, with Facebook-parent Meta dropping 8% and Caesars Entertainment losing 7.3%.

The drop erased most of the recent rally for stocks, though the S&P 500 is still up more than 1% from its Sept. 6 close of 3,908 and well above its mid-June levels, when it fell below 3,700.

 

 

Inflation is up 8.3% since last year—and more Fed rate hikes are likely looming

 

The rate of inflation was higher than expected in August, suggesting that inflation is far from under control. Continued interest rate hikes from the Federal Reserve are also likely.

Inflation rose by 0.1% since last month, but is down from its June peak of 9.1%, for a year-over-year rate of 8.3%, according to Labor Department data published Tuesday.

That’s 0.3% higher than many estimates, including a Bloomberg survey of 43 economists that predicted a rate of 8%.

Despite a 10.6% decline in gas prices, increased prices for shelter, food and medical care accounted for the elevated rate of inflation.

 

 

ANALYSIS

 

 

GBP/USD could plummet to 1.0520 if 1.1409/1.1350 breaks – Credit Suisse 

 

“GBP remains weak on a Trade Weighted basis and we thus continue to look for a break below 1.1409 and then a move to potential trend support at 1.1350, below which would signal a substantial breakdown and open the door to 1.1285 next, ahead of 1.1020/00, which is now our core objective. However, we would not rule out a move all the way to the 1985 lows at 1.0520 if 1.1409/1.1350 breaks.”

“First resistance is seen at 1.1745/63, then at the 55-day moving average and the recent high at 1.1900/1.1923, which ideally caps to prevent a lengthier consolidation.”

 

 

CHART

 

 

GBPJPY Near Term: Downside favored

 

Technical View: Short position below 166.85. Target 166.16. Conversely, break above 166.85, to open 167.2.

Comments: The pair remains under pressure. Further weakness favored.

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 

Footnotes
https://www.reuters.com/markets/europe/dollar-steadies-eyes-turn-us-inflation-data-2022-09-13/
https://www.reuters.com/article/global-precious/precious-gold-dips-as-dollar-gains-on-sharp-rate-hike-bets-after-u-s-cpi-data-idUSL4N30K2AY
https://www.reuters.com/business/energy/oil-prices-edge-higher-worries-over-tighter-supply-2022-09-13/
https://www.cnbc.com/2022/09/12/stock-futures-are-higher-as-wall-street-awaits-key-inflation-report-.html
https://www.cnbc.com/2022/09/13/inflation-rose-in-august-fed-interest-rate-hikes-likely.html
https://www.fxstreet.com/news/gbp-usd-could-plummet-to-10520-if-11409-11350-breaks-credit-suisse-202209131450