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Key U.S inflation reports can make or break equities – Market Overview

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 novembre 2022
Today, the market begins in anticipation of the two crucial events that will take place this afternoon: CPI and Core CPI reports in the U.S.

On the one hand, the U.S. CPI figure is forecasted to rise to 4.7%. Such a high number would be well above the Fed’s inflation target, potentially causing concerns and uncertainties among investors due to a potential advance rate hike sooner than expected or a reduction in bonds purchases.

But even more critical is the Core CPI figure, which is expected to exceed the 3% figure in its interannual data. As this data has a more structural character, suggesting that price increases will continue over time, the market might keep a closer eye on it. If the surge exceeds the 3.4% forecast, it could have a substantial impact.

The fixed income market seems to accept Fed’s thesis that the inflationary phenomenon is transitory, reflecting it in the Treasury Bond Yields - the 10-year benchmark has fallen below 1.50%, a level not seen since the beginning of last March when the high CPI figures had not yet been released. This case has also been influenced by the increase in risk aversion due to the increasing tensions between the United States and China. However, at the moment, the high level of adversity recorded in the Trump era has not been reached, and there are no expectations for this to happen. Anytime soon.

The result of yesterday's auction of the 10-year bond has also influenced this market’s performance. Currently, the appetite for these assets remains high, and the Fed's bond purchase program is still in place, which could be the main focus soon.

The ECB meeting this afternoon could also be important in terms of its impact on the market. Although there are no expectations of any change in their monetary policy, there is still the possibility that officials will show some bias in the report, depending on economic projections.

The market consensus seems to indicate that the ECB will continue to be dovish, with economic forecasts not too optimistic. However, there are voices within the government council that point to the need to reduce the purchase of bonds, opting for a more expansive monetary policy. In this sense, the euro falls slightly while waiting for the meeting. However, in the case of the EUR/USD, there is also a certain strengthening of the dollar occurring due to its characteristic of a safe haven, given the increase in risk aversion.

The pair fell a few pips but still far from the level considered the first support or pivot in the 1.2103 area. Below this point, it could make its way to the next support level in the 1.2040 area, where it would pass the 100-day SMA line.

Sources: investing.com, reuters.com.

Le informazioni contenute nel presente documento sono redatte da CAPEX.com/it e non costituiscono né devono essere interpretate come suggerimenti di investimento. Le informazioni di cui al presente documento costituiscono comunicazioni di marketing generali a scopo informativo e, in quanto tali, non sono state preparate nel rispetto dei requisiti di legge che promuovono le ricerche di investimento indipendenti. Inoltre, non sono soggette ad alcuna limitazione sulle transazioni condotte in anticipo rispetto alla divulgazione delle ricerche di investimento in questione.Gli utenti / lettori non dovrebbero fare affidamento esclusivamente sulle informazioni qui presentate e dovrebbero fare le proprie ricerche / analisi anche leggendo la ricerca reale sottostante.  Il contenuto è generico e non tiene conto di circostanze personali individuali, esperienza di investimento o situazione finanziaria attuale.Pertanto, Key Way Investments Ltd non accetta alcuna responsabilità per eventuali perdite di trader a causa dell'uso e del contenuto delle informazioni presentate nel presente documento. Le prestazioni passate e le previsioni non sono un indicatore affidabile dei risultati futuri.

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel ha lavorato per importanti istituzioni finanziarie, come Banco Santander e Banco Central-Hispano. È autore di libri sul trading di valuta con diverse pubblicazioni alle spalle.

I CFD sono strumenti complessi e presentano un rischio elevato di perdere denaro rapidamente a causa della leva finanziaria. Il 69.69% dei conti degli investitori retail perde denaro quando fa trading su CFD con questo fornitore. Considera se comprendi il funzionamento dei CFD e se puoi permetterti di correre il rischio elevato di perdere i tuoi soldi.