US consumer prices rise most in 40 years

“Always deliver more than expected.” — Larry Page

 

 

 

HEADLINES

 

 

 

• Dollar slumps as U.S. inflation surge comes in line with expectations
• Gold up 4th Day in Row as No Surprise in U.S. December Inflation
• Oil Rally Continues, Oblivious to U.S. Fuel Pile-up
• S&P 500 Inches Higher Following Hottest Inflation Report in Decades
• AUD/USD to push higher to 0.74 in H2 2022 – Rabobank

 

 

 

FOREX

 

 

 

Dollar slumps as U.S. inflation surge comes in line with expectations

 

The dollar fell to a two-month low against a basket of currencies on Wednesday after data, which showed an expected surge in U.S. consumer prices in December, fell short of offering any new impetus for the Federal Reserve's policy normalization efforts.

U.S. consumer prices surged in December, with the annual increase in inflation the largest in nearly four decades, which could bolster expectations that the Federal Reserve will start raising interest rates as early as March.

 

 

COMMODITIES

 

 

Gold up 4th Day in Row as No Surprise in U.S. December Inflation

 

Gold longs win again, even when U.S. inflation isn’t exactly scaring the Biden administration.

It was the fourth day in a row that Comex gold has risen, with a net gain of 2.1% in that stretch.

The latest run-up came after the U.S. Consumer Price Index reading for December came squarely within expectations, rising 7% on the year to keep with the highest pace of inflation in 40 years seen since October.

 

 

Oil Rally Continues, Oblivious to U.S. Fuel Pile-up

 

The New Year rally in oil showed no signs of slowing on Wednesday as those long the market added another 2% to crude prices after the previous day’s 4% climb. 

U.S. government data, meanwhile, clearly showed a slump in demand for gasoline as the onset of winter reduced driving and the need to fill up auto tanks as much as during the recent holiday stretch.

 

 

 

STOCKS

 

 

 

S&P 500 Inches Higher Following Hottest Inflation Report in Decades

 

The S&P 500 was marginally higher Wednesday, as data showing inflation hitting the fastest pace in decades, which was largely expected, failed to spook investors.

The consumer price index rose 0.6% in December, just above expectations for a 0.5% increase, taking the year-on-year consumer prices through December to 7%, in-line with expectations and the fastest rate since 1982.

 

 

 

ANALYSIS

 

 

AUD/USD to push higher to 0.74 in H2 2022 – Rabobank

 

Aside from the pick-up in the broad-based value of the USD in H2 last year, one of the major drivers behind the relative softness of the AUD/USD last year was, in our view, the continued dovish position of the RBA.  Headed into 2022 there is scope for this to change.”

“There is potential for AUD/USD to be whipsawed by USD related volatility in the early months of this year on the back of Fed policy signals.  That said, we expect AUD/USD to push higher to 0.74 in H2 2022.”

 

 

 

CHART

 

 

 

Bitcoin – Daily Candlesticks

Source: GKFX Prime Metatrader 4

BTC/USD is lifting off $40,000 and long-term support after going overbought on the daily chart RSI. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

 

 

SOURCE

 

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/aud-usd-to-push-higher-to-074-in-h2-2022-rabobank-202201121617
https://www.investing.com/news/stock-market-news/sp-500-inches-higher-following-hottest-inflation-report-in-decades-2737361
https://www.investing.com/news/commodities-news/gold-up-4th-day-in-row-as-no-surprise-in-us-december-inflation-2737376
https://www.investing.com/news/economy/dollar-swoons-as-powell-soothes-policy-fears-cpi-test-looms-2736426
https://www.investing.com/news/commodities-news/us-oil-stockpiles-fell-by-45-million-barrels-last-week-eia-2737069