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Asia Stocks to Open Firmer; Currencies Steady: Markets Wrap
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Asia Stocks to Open Firmer; Currencies Steady: Markets Wrap
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EUR/USD Forecast: Sell the rumor, buy the fact? Why US inflation data may trigger a rallyANALYSIS |
5/12/2021 6:53:22 AM GMT
EUR/USD has been under pressure as the dollar benefits from safe-haven flows.
All eyes are on US inflation, which is set to spark volatility.
Wednesday s four-hour chart is painting a bullish picture.
Inflation is coming – perhaps, but it could already be well in the dollar s price, resulting in traders selling the greenback and potentially sending EUR/USD to new highs.
A dark mood has gripped markets. The main reason is the fear of rising prices that would cause the Federal Reserve to raise interest. A long list of officials at the world s most powerful central bank has reiterated the message that price rises are transitory and would subside after a few months. Investors remain in disbelief.
5/12/2021 12:57:26 PM GMT
US inflation figures have smashed expectations and points to an overheating economy.
Stocks have tumbled and the dollar has responded positively in a knee-jerk reaction.
The Federal Reserve may still see through these figures and turn the trend around.
Rearing its ugly head – headline inflation has leaped to 4.2% annual in April while core prices have surged by 3% YoY, both far above expected. The Consumer Price Index figures are in line with other robust statistics for last month, and end the confusion related to the weak Nonfarm Payrolls. That NFP was probably the outlier.
Nevertheless, similar to the response to the jobs data, markets responded forcefully, this time sending the dollar higher and stocks down. Investors assess that the Federal Reserve will be forced to begin tapering its bond buys sooner rather than later, ahead of the inevitable rate hike. Will the Fed take that path?
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