Market Drivers – US Session 13/12/2022

Economic data dragged the US dollar down after Tuesday’s US Consumer Price Index reading that rose by 7.1% on a yearly basis in November, versus previous 7.7% in October. In the same period, core CPI, which excludes volatile food and energy prices, rose by 6%, below the 6.1% expected.

The encouraging figures triggered expectations that the US central bank will slow the pace of monetary policy tightening and maybe announce the end of the current tightening cycle.

US stocks soared ahead of the opening, with the DJIA adding over 600 points but trimming most of its gains ahead of the close. Nevertheless, the Greenback remained on the back foot and near its recent multi-month lows.

The EUR/USD pair hovers around 1.0620 after peaking at 1.0672. GBP/USD, in the meantime, trades at 1.2350, ahead of the UK November Consumer Price Index.

The Australian dollar holds on to substantial gains vs the USD, with the pair trading at around 0.6850. USD/CAD is down to 1.3540.

Crude oil prices kept advancing, with WTI trading at $75.20 a barrel. Oil surged after OPEC trimmed its forecast for oil demand by 140,000 bpd for the current quarter, citing slowing activity in China. OPEC also cut Q1 2023 forecast by 410,000 bpd. Spot gold peaked at $1,824.53 a troy ounce, now hovering around $1,810.00.

On Wednesday, the focus will be on the FOMC decision and the remarks by Fed Chair Jerome Powell. The Fed is expected to hike rates by 50 bps and could anticipate the end of the tightening. Powell has anticipated there’s a good chance the central bank will slow the pace of tightening as soon as in this meeting, and the encouraging inflation reading boosts this idea.

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