Markets are set for a quiet end to the week with SPX and DOW closing at new highs, while Nasdaq remains dragged by higher yields as cyclicals continue to gain favour. A strong US PPI reading helped to lift the US dollar on Thursday, highlighting the focus on price growth. The consumer will be in the spotlight Friday with the UMich consumer sentiment survey. Below is the latest sign of Cardano's resilience against Ethereum as ADA/USD regains $2.00. Ashraf has constantly pointed out over the past 6 weeks how Cardano contine to outperform most major cryptos (showing smaller declines than those seen in BTC and ETH). 

Chart

The latest trade in global appears to be based on the belief that inflation is cresting and delta will be cresting soon, at least in the United States.

What's tricky about the trade is that no one knows what's coming next. Both the inflation and covid puzzles will take months to sort out and market participants will be along for the ride.

On Wednesday, the US dollar sold off on flat CPI number but on Thursday it turned higher again as PPI beat expectations at 7.8% compared to 7.3% expected. Core producer prices were similarly strong.

That ebb and flow is likely to be a microcosm of trading in the next year. The multitude of potential skews in pricing data makes it challenging to define how these will finally determine the final headline figure. CPI showed that auto prices are topping but how much of the gains they give back and how soon is a mystery.

Keep in mind that markets aren't just pricing in 2% vs 3.5% inflation or when those levels will be reached. The market has little reason to fear an overshoot in prices. The real risk is that a wage-price spiral puts the Fed behind the curve and leads to a jarring set of surprise hikes and upends the low rate environment. To be sure, that's a tail risk but given new highs in US equities, it's a a risk like no other.

Looking ahead, the UMich consumer sentiment survey will offer some insight on the health of the consumer, but the larger market mover may again be inflation. They survey includes 1-year and 5-10 year views on prices and if those shift even slightly, the market will take note.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD drops to two-year lows below 1.0400 after weak PMI data

EUR/USD drops to two-year lows below 1.0400 after weak PMI data

EUR/USD stays under bearish pressure and trades at its weakest level in nearly two years below 1.0400. The data from Germany and the Eurozone showed that the business activity in the private sector contracted in early November, weighing on the Euro.

EUR/USD News
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI

GBP/USD falls to six-month lows below 1.2550, eyes on US PMI

GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as market focus shift to US PMI data releases.

GBP/USD News
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark

Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark

Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.

Gold News
S&P Global PMIs set to signal US economy continued to expand in November

S&P Global PMIs set to signal US economy continued to expand in November

The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.

Read more
A new horizon: The economic outlook in a new leadership and policy era

A new horizon: The economic outlook in a new leadership and policy era

The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures