Data out of the US showed that inflation hit 40-year highs. The US dollar strengthened across the board on the news with EURUSD trading within a 1.05 handle, GBPUSD trading within a 1.23 handle and USDCAD trading within a 1.27 handle. Additional comments from other central banks regarding inflation supported the move. The market is now pricing in more than 200bps of rate hikes for the US by the end of the year.
June 10, 2022
US inflation rose to a 40-year high in May exceeding market expectations. This release puts pressure on the US central bank and adds to political pressure on the White House. The market is now pricing in more than 200 bps in the next five meetings to push US key rate to about 3% by December. USD strengthened against its peers on the news.GBPBank of England published its quarterly Inflation Attitudes survey stating that it expects the highest 12-month inflation on record. GBPUSD is trading lower within the 1.23 handle.EUREURUSD is trading below 1.06 on inflation news out of the US and Eurozone. ECB’s Governing Council member Martins Kazaks stated that inflation is too high and monetary policy to manage is justified.CADCanadian jobless rate falls to the lowest level since 1976 and read 5.1%. USDCAD strengthened above 1.27 following US inflation data and stabilized following the jobs report from Canada.ASIA/PACIFICStatement from Bank of Japan officials expressed concern for the recent sudden weakening of the yen and stated that the central bank would take action if necessary. Despite broad USD strength, USDJPY has weakened 0.3%.
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