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US Dollar Steams Ahead with US Inflation Data in Focus

The US dollar is gaining strength as traders anticipate the latest inflation report from the US. Bitcoin slips below $50K.

SageFX - Dec, 10, 21

*Sage FX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions and Risk Disclosure for more information.

Principal Points

  • US dollar gains against a weaker euro as traders watch for the latest US inflation report
  • Bitcoin moves lower on Thursday and early Friday as price slips under $50,000 per coin

What’s Moving in the Markets?

The US dollar advanced in forex markets Thursday and early Friday as traders prepare for the latest reading on US inflation. The big event on Friday, the consumer price index report, is set to define the trading environment across asset classes.

This said, the dollar gained more than half a percent against the euro on Thursday. In more detail, the EUR/USD declined roughly 67 pips to hit a session low of 1.1268. The drop, however, served to erase euro gains achieved a day earlier.

Further, the USD/CAD and the USD/CHF were also swayed by a stronger greenback. First, the USD/CAD pair jumped about 0.6% yesterday to trade at a daily high of 1.2721. And second, the USD/CHF exchange rate advanced 0.7% to float near 0.9265, the pair’s daily peak.

In that context, the US dollar is likely to get more volatile today when the US posts November’s inflation figures.

Also, in signs of a healing US economy, last week’s jobless claims reached a 52-year low as they fell to 184,000.

What’s the Big Picture for Traders?

This said, the consumer price index will be a key to define where the US economy is going. In other words, a higher-than-expected inflation data could prompt the US Federal Reserve to speed up its monetary support reduction.

On that note, once the pandemic arrived in March last year, the US central bank decided to inject $120 billion a month to support the economy. Now, however, this pandemic-era action has fueled a quick climb in consumer prices, or inflation. It also led to a boom in financial markets with stocks posting dozens of all-time highs this year.

To tackle this, the Fed has started unwinding this support. Still, a lower-than-expected reading on inflation would suggest the US economy is cooling down as prices stabilize.

Against that backdrop, economists expect inflation to stay high. In numbers, a Dow Jones survey shows participants see inflation for November hitting 6.7% on an annualized basis. That would be higher than October’s multi-year peak when prices surged 6.2% year on year. It would also put inflation at its highest level since June 1982.

What to Watch in Crypto Markets?

In cryptocurrency trading, bitcoin and other major tokens remain pressured on Friday. A broad-based pullback in the fast-developing crypto asset class has pushed bitcoin below the $50,000-mark. Moreover, the original cryptocurrency slipped to a weekly low earlier as price touched $47,300.

Presently, the price of bitcoin is floating near $48,500 per token. This week, however, bitcoin is looking to post a loss if its price closes below its weekly open of $49,200.

Ether, the second-biggest cryptocurrency in the market, is also under pressure. The Ethereum network’s native coin is currently gravitating towards $4,150, or just about flat for the week. On Thursday, Ether’s price tumbled about 7% as crypto assets declined amid a lack of fresh news.

Economic Data Coming Up Today (EST times)

On Friday, the US consumer price index (CPI) will be released at 08:30 am. The news is likely to increase the volatility in forex and commodities, as well as stocks.


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