US Dollar Index approaches 101.00 on expectations of a 50 bps interest rate hike by the Fed
12.04.2022, 21:47

US Dollar Index approaches 101.00 on expectations of a 50 bps interest rate hike by the Fed

  • The DXY is marching towards 101.00 as higher US CPI has underpinned Fed’s tightening bets.
  • US CPI Ex Food & Energy have landed at 6.5%, in mid of the estimates and previous figure.
  • Weaponry assistance to Ukraine by UK and US has bolstered the risk-off impulse.

The US dollar index (DXY) has confirmed a fresh bullish rally after overstepping the previous week’s high at 100.19 decisively. The DXY bulls have got an adrenaline rush as the disclosure of US inflation has slightly crossed the estimates. The US Bureau of Labor Statistics has reported the yearly US Consumer Price Index (CPI) at 8.5%, mildly higher than the market forecast of 8.4% and significantly higher than the previous print of 7.9%. Multi-decade record-high inflation in the US is compelling the Federal Reserve (Fed) to elevate interest rates and initiate balance sheet reduction soon.

Meanwhile, the US CPI Ex Food & Energy has landed at 6.5%, in between the estimate of 6.6% and the prior figure of 6.4%, which indicates price pressures majorly in necessity products.

The US Treasury yields surrendered Monday’s gains in the American session as the market participants have already discounted the elevated print of US CPI. The 10-year US Treasury yields have tumbled to 2.73% after printing a three-year high at 2.83%.

US and UK agree to put pressure on Russia

US President Jo Biden and UK Prime Minister Boris Johnson have agreed to put pressure on Russian leader Vladimir Putin as Moscow has repositioned its rebels in the eastern Donbas region. The two administrations are planning to accelerate and bolster military and economic assistance to Ukraine.

Key events this week: Producer Price Index (PPI), Initial Jobless Claims, Retail Sales, Michigan Consumer Sentiment Index (CSI), and Industrial Production.

Eminent issues on the back boiler: Russia-Ukraine Peace Talks, Reserve Bank of New Zealand (RBNZ) interest rate decision, European Central Bank (ECB) interest rate decision, and Bank of Canada (BOC) interest rate decision.

 

 

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