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The negative market mood erased Tuesday’s relative optimism. This sentiment has benefited the American Dollar on Wednesday, which extended its latest rally against major rival currencies.
The trading day witnessed the release of fresh inflation reports that reminded traders of the high risk of a looming global recession.
The EUR/USD pair finished the day around 0.9770, while GBP/USD settled at 1.1215 as the sterling struggles amid continued political high waves that threaten the future of the new government led by Liz Truss.
The AUD/USD is currently trading at 0.6260, while USD/CAD is marginally higher, at 1.3770. The USD/JPY pair trades at a fresh multi-year high, not far from the 150.00 threshold.
Gold came under strong selling pressure and currently changes hands at $1,629. Crude oil prices, on the other hand, managed to recover some ground, and WTI is now at $84.30 a barrel.
Economic Data
The European Union published the second estimate of the September Consumer Price Index, which was downwardly revised to 9.9% YoY, barely below the 10% previously estimated. Core inflation was confirmed at 4.8%.
The UK released the September annual CPI, which surged by 10.1% YoY, higher than the previous 9.9% and also above the 10% expected, a fresh multi-decade high. The reading, which excludes volatile food and energy prices, rose by 6.5% in the year to September, surpassing the previous 6.3%.
The Canadian CPI contracted in September, up 6.9% YoY from 7.0% in August. The Bank of Canada’s core CPI, however, unexpectedly climbed to 6.0%.
Other Developments
US President Joe Biden decided to tap 15 million barrels of crude oil from the Strategic Petroleum Reserves by the end of 2022 and detailed a strategy to refill the stockpile when prices drop.
High inflation is reviving recession fears. Most central banks are determined to fight it regardless of their actions’ perceived negative impact on on economic growth.
The US Federal Reserve’s Beige Book showed that pessimism increased amid weakening demand and as price growth remained elevated, further fueling markets’ concerns.
European and American indexes closed in the red, reflecting market concerns. Government bond yields, on the other hand, surged, with the US 10-year Treasury note yield reaching to 4.13% and the 2-year note yield peaking at 4.55%.
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