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The yield on the two-year U.S. Treasury note fell to a six-month low of 3.6550% and was last at 3.6611%.On April 4, local time on April 3, U.S. Secretary of Health and Human Services Robert Kennedy Jr. said that about 20% of the layoffs in the Department of Government Efficiency were wrong and needed to be corrected. The U.S. Department of Health and Human Services laid off about 10,000 people on the 1st. Kennedy said that people who should not have been laid off were laid off, and the department is restoring their positions. Kennedy said that canceling the entire lead poisoning prevention and monitoring department of the Centers for Disease Control and Prevention was one of the mistakes. At present, it is unclear what other projects Kennedy may plan to restore.Bank of Japan Governor Kazuo Ueda: Will consider the impact of food costs on consumers.On April 4, local time on the 3rd, the automobile company Stellantis said that due to the impact of the US import automobile tariff policy, the company decided to lay off 900 employees in its five US factories and suspend production operations at two assembly plants in Canada and Mexico. Antonio Filosa, Chief Operating Officer of Stellantis Americas, said that the US factories that were laid off were powertrain and stamping parts factories, which produced spare parts for two assembly plants in Canada and Mexico. According to the plan, the assembly plant in Canada will stop production for two weeks, and the assembly plant in Toluca, Mexico will suspend production throughout April. Filosa said the company is "continuing to evaluate the medium- and long-term impact of tariffs on operations."Bank of Japan Governor Kazuo Ueda: Non-weather factors may push up food prices.

Focus on US inflation as US Dollar Index fights to hold around 20-year high of over 108.00

Alina Haynes

Jul 13, 2022 10:54

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The US Dollar Index (DXY), which oscillates close to the greatest levels in two decades, which were attained the day before, illustrates the market's nervousness prior to substantial US inflation data. As a result, the dollar index versus the six most important currencies regains recent losses and defends the 108.00 level, remaining at 108.16 during Wednesday's Asian session.

 

The White House (WH) statement and subpar US data contributed to the DXY's decline from the previous day's multi-year high. In a memo, the White House said that "US economic statistics, notably the June jobs report, are inconsistent with a recession in the first or second quarters," according to Reuters on Tuesday. The news helped the market book profits ahead of crucial data and events.

 

Additionally, in June, the US NFIB Business Optimism Index registered 89.5 vs. 93.1, its lowest reading since early 2013.

 

It should be noted, though, that the most recent economic projections from the International Monetary Fund (IMF) seem to have reignited market concerns and increased demand for the US dollar. The IMF lowers its US GDP growth prediction for 2022 from 2.9 percent in late June to 2.3 percent as a result of fresh US data. The issues of growing inflation and the significant Federal Reserve interest rate increases necessary to control prices were highlighted by the Fund's inclusion of the new estimates in the entirety of its annual assessment of the U.S. economy, according to Reuters.

 

Concerns about a viral variant spreading to Shanghai and causing a lockdown in Wugang, Henan Province, came from China at the same time.

 

The main obstacle to the DXY's movements is probably the market's anxiety ahead of the critical US CPI for June, which is expected to increase to 8.8 percent YoY from 8.6 percent YoY. Prior to the announcement of the inflation data, Thomas Barkin, president of the Federal Reserve Bank of Richmond, said, "There is a road to lower inflation, but a recession is possible."

 

Despite the brief recovery, Wall Street benchmarks ended in the red as 10-year US Treasury rates fell for the second day in a row, to about 2.97 percent. Additionally, Wednesday's opening of the S&P 500 Futures shows minor increases.

 

Future DXY traders will need access to US inflation data, but they may also find fun in news from China and speculations surrounding Russia. DXY may experience more increases if the US CPI shows a favorable surprise.