US inflation expectations jump to two-week top

Anil Panchal FXStreet

US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, extend the recovery moves from the last Thursday while flashing 2.38% by the end of Wednesday’s North American session. In doing so, the risk barometer jumps to the highest in two weeks while underpinning the tapering concerns.

It’s worth mentioning that the gauge of sentiment challenges the lower high bearish formation established since July 29, suggesting further support to the US Federal Reserve (Fed) tapering chatters should it break the resistance.

Also favoring the concerns over the dialing back of the Fed’s easy money policies were the latest comments from the US central bankers. St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid.

In addition to the Fed taper woes, coronavirus fears and the pre-ECB sentiment may also back the risk-off mood, which in turn support the US dollar’s safe-haven demand.

Read: US Dollar Index Price Analysis: DXY restores the run-up to 93.20

Moving on, market players are likely to remain cautious, mostly keeping the latest risk-aversion wave, ahead of the key European Central Bank (ECB) monetary policy meeting. Also important will be the weekly US job numbers and headlines concerning the coronavirus as well as the US stimulus.

Read: European Central Bank Preview: Taper on the table, but don’t get too excited about it

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD looks inconclusive near 0.7120

AUD/USD has been struggling for direction on Monday, coming under fresh downside pressure soon after retesting the 0.7140 area and looking to stabilise in the low 0.7100s ahead of the opening bell in Asia on Tuesday. The pair’s daily decline comes on the back of the generalised improvement in the sentiment surrounding the Greenback.

USD/JPY eases below 157.00 amid looming intervention risks

USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check. A Japanese holiday also keeps traders on edge amid escalating geopolitical tensions between Russia and Ukraine and in the Middle East. As a result, the US Dollar pauses its pullback, limiting the pair's downside.

Gold meets resistance around $4,400

Gold kicks in the new trading with on the back foot, keeping its trade near $4,350 per troy ounce. The precious metal’s correction comes on the back of the firmer US Dollar and espite declining US Treasury yields across the curve.

Bitcoin rallies near $86K on improving markets ahead of quarterly options expiry

Bitcoin (BTC) market conditions improved over the past week as spot buying pressure strengthened and derivatives positioning increased, pushing the top crypto near $86,000. BTC’s price momentum rose from 47.7 to 53.6, representing a 12.5% weekly increase.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.