Market Drivers – US Session – 8 February

As the US inflation data is expected to show that prices rose by 0.4% in January, for a 7.2% gain from one year ago, major currency pairs continue lacking certain direction and struggle to maintain their strength.

The global financial markets closed in the American session with the surge of the US dollar and an improvement in the performance of US stocks due to a new batch of positive earnings reports.

Economic data
The US data came all negative on Tuesday, extending gains for the US dollar and gold. The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, declined another 1.6% this month, after falling 7.6% in January. The overall reading now stands at 44.0, keeping the index in negative territory for the sixth consecutive month. A reading above 50.0 signals optimism and below 50.0 indicates pessimism on IBD/TIPP indexes.

Continued strong consumer appetite for overseas goods pushed up the US trade deficit in December, sending the full-year import-export gap to a record level in 2021.

The December deficit in trade of goods and services grew by 1.8% to a seasonally adjusted $80.7 billion, the Commerce Department said Tuesday, just less than the record deficit of $80.8 billion in September.

The full-year trade deficit for 2021 increased 27% to $859.1 billion, larger than the previous record of $763.53 billion in 2006. Annual trade balance records date to 1960.

Other developments
The yields on the ten-year US Treasury bonds continue to rise from last trading day, with a boost of optimism about US employment data, which reflected results higher than market expectations last Friday, and rising expectations of US inflation, whose data appears next Thursday, in addition to the impetus it received from the decision The Bank of England raised rates last Thursday and Christine Lagarde, President of the European Central Bank’s Governing Council, indicated that the central bank may raise rates in 2022.

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