The inflation slowdown in the US has eased investors’ fears about the Fed's reduction of the QE program

According to the US Labor Department, the consumer price index (CPI) decreased from 0.9% to 0.5%. The core CPI, which does not include food and fuel prices, fell from 0.9% to 0.3%. On a year-on-year basis, the inflation remained at 5.4%, in line with forecasts. Core annual inflation decreased to 4.3% from 4.5%. The US inflation growth is slowing down, easing investors’ fears that the Federal Reserve will reduce its QE program soon. Considering this news, the dollar index decreased by 0.16%. The Dow Jones Industrial Average and the S&P 500 closed at record highs, while sectors related to economic growth rose following the signing of the infrastructure bill. The Dow Jones index added 0.62%, the S&P 500 index increased by 0.25%, and the Nasdaq index decreased by 0.16% again.

European stock indices also hit new price records. The STOXX 600 composite index increased by 0.4%, hitting an all-time high for the eighth consecutive trading session. The good report results from the EU companies over the past quarter compensate for the concerns about a new wave of COVID-19 and weak European statistics. Famous airline JetBlue started transatlantic flights from the US to London despite the rise of the Delta strain cases in the US.

The White House appealed to OPEC+ countries to increase oil production in order to increase supply in the market. Obviously, the US is against the rising of fuel prices. Meanwhile, last week's US crude oil inventories data showed that Americans themselves are not eager to increase domestic oil production.

Due to the fall of the dollar index and reducing the yields of US government bonds, gold futures added 1.26%. Buy the rumor, sell the fact. For now, rumors on QE program cuts are just rumors, so gold and silver will rise in the coming weeks.

Asia-Pacific stock indices are declining. The region remains concerned about the recent tightening of the control of Chinese regulators over a number of companies, as well as due to the widespread of the Delta strain cases. Low vaccination rates are one of the main reasons for this dramatic outbreak. A review of inflation expectations from the Reserve Bank of New Zealand (RBNZ) predicts a sharp rise in inflation from 1.87% to 3.02% by the end of the year. New Zealand's strong economic recovery, rapidly declining unemployment rate, and rapidly rising house prices triggered RBNZ to open the issue of reducing stimulus.

Main market quotes:

S&P 500 (F) 4,447.70 +10.95 (+0.25%)

Dow Jones 35,484.97 +220.30 (+0.62%)

DAX 15,826.09 +55.38 (+0.35%)

FTSE 100 7,220.14 +59.10 (+0.83%)

USD Index 92.90 -0.16 (-0.17%)

Important events for today:
  • – New Zealand RBNZ Inflation Expectations (q/q) at 06:00 (GMT+3);
  • – Japan Industrial Production (m/m) at 07:30 (GMT+3);
  • – UK GDP (q/q) at 09:00 (GMT+3);
  • – UK Industrial Production (m/m) at 09:00 (GMT+3);
  • – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
  • – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
  • – US Producer Price Index (m/m) at 15:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

by Justforex, 2021.08.12

We advise you to get acquainted with the daily forecasts for the major currency pairs.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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