Foreign Exchange Market Flash News: USD under pressure
- Currency exchange
Inflation numbers trigger USD weakness and stock market rally?
The market has been waiting with great excitement for the latest inflation figures from the USA, and rightly so. Forecasts had expected a figure of 8%, but the inflation came in only at 7.7% year-on-year.
Implication: The Federal Reserve could hold off on further interest rate hikes
Market participants assumed a further tightening of monetary policy, these inflation figures now surprise. Why it is such a surprise is clear: usually the monetary policy and central bank measures arrive in the real economy with a time lag of 6-9 months. Clearly the afraids are now to set rates too high for too long.
The result was a big USD sell off, a NASDAQ that was up more than 7%, the biggest daily gain this year and rates are under pressure.
EUR/USD breaks through downward trend:
USD/CHF collapses by 6%:
Conclusion for the Foreign Exchange Market
It is quite clear which economic indicator is currently the most important – inflation. Volatile markets are expected to continue, with central banks assuming an even more central role.
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Please note that this elaboration was completed on 14/11/2022 09:36 CET.
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