Market Drivers – US Session 09/09/2022

Mohamed Abdelhamid 10 September, 2022 3:17 am Forex Market, Market Update

The US dollar slides as investors balance positions ahead of key US inflation data. The dollar fell to a more than one-week low on Friday as investors consolidated gains after a sharp rise against most currencies, ahead of US inflation report that could determine the size of the Fed’s next rate hike

US rate futures are pricing in an 87% chance of the Fed hiking by 75 bps hike this month, with fresh U.S. consumer price data next week likely to be closely watched.

One of the big gainers was the Euro, which leapt as much as 1.2% to a three-week high of $1.0114, a day after the ECB raised its key interest rate by an unprecedented 75 basis points (bps).

Economic Data

Friday’s economic calendar allowed for speeches by Fed officials, with no remarkable data releases during the US trading session.

This week the supply data showed a bigger than expected build for crude oil of 8844K vs. estimates of a draw of -250K. Gasoline stocks showed a build of 333K vs. a draw of -1667K estimate.

The number of active, oil-targeted rigs in the US fell by five rigs in the latest reading announced by Baker Hughes at 591 this week versus 596 last week.

Other Developments

On the week, the dollar index, which tracks the greenback’s value against six major peers, posted its first weekly fall in four on Friday.

The dollar this week soared to a 24-year high against the yen, a 37-year peak versus sterling, with the dollar index surging to a more than 20-year high.

On Friday, the dollar index dropped as low as 108.35 and was last down 0.5% at 108.96.

Europe faces a weak economic outlook, with sky-high energy prices squeezing consumers and businesses. European Union energy ministers were split on Friday over whether to cap Russian gas prices, as they met to work out steps to shield citizens.

Currencies perceived as riskier bets also benefited from an improvement in market sentiment to end the week, reflected in gains across European and U.S. stock markets.

Sterling gained 0.8% to $1.1592, after a modest dip the previous day following the death of Queen Elizabeth.

The Bank of England said on Friday it would delay its next monetary policy meeting by one week due to the period of royal mourning.

The Japanese yen posted its best daily gain in a month, up 1% at 142.675 yen per dollar, as it clawed away from recent 24-year lows.

Bank of Japan Governor Haruhiko Kuroda said on Friday rapid yen moves were undesirable after a meeting with Prime Minister Fumio Kishida.

The Australian dollar also had its best daily rise in a month, up 1.3% versus the U.S. dollar to US$0.6850, also rebounding from deep lows.

Even beaten down cryptocurrencies advanced at the dollar’s expense, with bitcoin up more than 10% at $21,300.

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