Market Drivers- US Session 12/10/2022

Mohamed Abdelhamid 13 October, 2022 3:22 am Forex Market, Market Update

The US session left the American Dollar slightly changed on Wednesday, despite some noise coming from major central banks. Investors await US inflation data, which could provide fresh clues on the policy track to be followed by the Federal Reserve in next policy meetings.

The EUR/USD pair remains stable at around 0.9700, while GBP/USD has been a bit more volatile, ending the day at around 1.1100. The USD/CAD currently trades at 1.3810, while AUD/USD is up to 0.6280.

The Japanese yen plunged against the greenback, with USD/JPY reaching a fresh multi-decade high of 146.96, holding on to gain as the Bank of Japan refrained from intervening.

Gold ticked higher and trades around $1,675 a troy ounce, while crude oil prices extended their slide. WTI is now at $87.20 a barrel.

Economic Data

The producer price index, a measure of prices that U.S. businesses get for the goods and services they produce, increased 0.4% for the month, compared with the Dow Jones estimate for a 0.2% gain. On a 12-month basis, PPI rose 8.5%, which was a slight deceleration from the 8.7% in August.

Other Developments

Germany will publish the final estimate of its September CPI, foreseen steady at 10.9% in its EU harmonized version.

The UK latest emergency program was in the news headlines again. Rumors that the central bank could extend its latest emergency founding program beyond this week triggered risk appetite early on Wednesday, although the BOE quickly denied such a possibility.

UK Prime Minister Liz Truss aims to move forward with the mini-budget, despite criticism about the £60 billion funding hole. Truss repeated that she would not cut public spending, despite tax cuts and skyrocketing inflation.

Mid-US afternoon, the US Fed released the Minutes of the latest meeting. Policymakers repeated they are determined to maintain the restrictive monetary policy to control elevated inflation. Additionally, officials said that once they reach what they consider a restrictive level, “it would be appropriate to keep it there for a period of time.”

Restricted volatility could be blamed on the upcoming US Consumer Price Index report. Inflation is expected to have risen by 8.1% YoY, decreasing slightly from the previous 8.3%. Core inflation, on the other hand, is expected to have ticked higher toward its recent multi-decade high of 6.5%.

Coronavirus may soon become a focus across financial markets. China’s zero-covid policy is witnessing fresh shutdowns in the country, with Shanghai closing schools, bars, gyms, and other venues. China is not alone, as Europe and the WHO warned about a new wave entering Europe, which could be complicated by a resurgence of flu.

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