Forex Today: Dollar wins as inflation fears return
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.
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