Forex Today: Dollar wins as inflation fears return

Valeria Bednarik FXStreet

What you need to know on Thursday, November 11:

Risk-aversion took over financial markets and the dollar made the most out of it. The catalyst was US inflation, as the US annual Consumer Price Index soared to its highest in three decades, hitting 6.3% YoY in October. Stocks took a turn for the worse as yields soared, reflecting mounting concerns of further tightening in the US.

Also, Federal Reserve Bank of San Francisco President Mary Daly said noted that even though it’s temporary, high inflation hurts. She added that it would be premature to change the pace of monetary policy tightening.

The dismal mood was exacerbated by news indicating that the Chinese giant Evergrande stands on the verge of default. Some bondholders have not received coupon payments by the end of the 30-day grace period on coupon payments of more than $148 million on its April 2022, 2023 and 2024 bonds at the close of Asia business, and market talks hint at DMSA preparing bankruptcy proceedings against the Evergrande Group. With that in mind, it's possible that Asian shares follow their overseas counterparts on their way down.

The EUR/USD pair settled below 1.1500, its lowest since July 2020. GBP/USD nears 1.3400 as investors await news on the Brexit front.

The AUD/USD pair is down to the 0.7330 region, with losses partially offset by soaring gold prices, as the bright metal trades around $1,840 a troy ounce after reaching a multi-month high of 1,868.54. USD/CAD flirts with 1.2500 as crude oil prices gave up to the ruling dismal mood, with WTI ending the day at $81.10 a barrel.

Bitcoin smashes through $69,000 as US inflation hits its highest point in 30 years

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.