CAPITALLDIGEST, MARKET REVIEW. 15TH AUGUST, 2022
MONDAY 08/8/2022 -DOLLAR EASES AS INVESTORS AWAIT INFLATION DATA FOR FED CLUES
The dollar eased on Monday, giving back some of the gains it made following Friday’s blockbuster U.S. jobs report, as investors looked ahead to Wednesday’s inflation data for more clues about the Federal Reserve’s next steps. U.S. job growth rose much more than expected in July, data showed on Friday, lifting the employment level above its pre-pandemic mark and calming fears that the economy was in recession. Investors read the data as a indication the Fed could raise interest rates more aggressively to combat inflation. The upbeat mood carried into Monday, with European stocks rising and North American stocks markets opening higher before pulling back to around even in choppy trading as investors’ attention turned to company earnings.
TUESDAY 09/8/2022- DOLLAR EDGES HIGHER AS TRADERS AWAIT U.S. INFLATION REPORT
The safe-haven dollar edged higher on Tuesday, erasing earlier losses as risk appetite dwindled ahead of key inflation figures that could offer clues on how aggressive the Federal Reserve will be in its expected interest rate hike in September. The dollar index USD=, which measures the currency’s value against a basket of peers, was up 0.047% at 106.38 at 3:15 p.m. Eastern time (1915 GMT). The greenback had drifted lower in thin summer trading from the start of the session, but then reversed course as U.S. stock markets slid on profit warnings, global inflationary concerns, and data that showed U.S. worker productivity fell sharply in the second quarter.
WEDNESDAY-10/8/2022- DOLLAR DROPS ON COOLER-THAN-EXPECTED U.S. INFLATION DATA
The dollar fell more than 1pc on Wednesday following a cooler-than-expected inflation report for July that raised expectations of a less aggressive rate hike cycle than previously anticipated from the US Federal Reserve. US consumer prices did not rise in July as the cost of gasoline plunged, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years. Economists polled by Reuters had forecast a 0.2pc rise on the heels of a roughly 20pc drop in the cost of gasoline. The dollar index, which measures the currency’s value against a basket of currencies, was down 1.128pc at 105.15 at 9:00 a.m. Eastern time (1300 GMT).
THURSDAY 11/08/2022- DOLLAR BRUISED AFTER U.S. INFLATION COMES IN BELOW EXPECTATIONS
The euro and Japanese yen were sitting pretty on Thursday morning after U.S. inflation data overnight came in less hot than feared and sent the dollar tumbling. U.S. consumer prices were unchanged in July compared with June, when prices rose a monthly 1.3%. The July result was lower than expectations due to a sharp drop in the cost of petrol, causing markets to reposition on hopes that inflation was peaking. If price rises have reached their zenith, investors expect the U.S. Federal Reserve will not have to maintain its eye-wateringly steep pace of interest rate hikes, which had been supporting the dollar. The euro was at $1.0297 on Thursday morning, after jumping 0.84% the day before, its biggest daily percentage gain since mid-June. holiday in Japan.
FRIDAY 12/8/2022 -DOLLAR GAINS AS MARKETS REASSESS FED RATE HIKE BETS
The dollar edged higher in early London trading on Friday, after hawkish comments from U.S. Federal Reserve officials pushed against the idea this week’s U.S. inflation data could prompt the central bank to slow down policy tightening. The U.S. inflation data was lower than expected, boosting riskier assets such as equities and weakening the dollar, as markets interpreted it as an indication the Fed could be less aggressive in rate hikes. But Fed officials made clear they would continue to tighten monetary policy. San Francisco Federal Reserve Bank President Mary Daly said on Thursday she was open to the possibility of another 75 basis point (bp) hike in September to fight too-high inflation. At 0744 GMT, the dollar index was up 0.2% on the day at 105.28, after four days of losses that have put it on track for a weekly decline of 1.2%.