On Thursday, the markets saw the NASDAQ 100 up 7.4% and the USD/JPY pair down 545 points. Why? Because the U.S. Consumer Price Index report for October was 7.7% versus expectations of 8%.
Markets took this as a suggestion that the Fed will turn around in December and “just” raise rates by 50 bp, slowing the pace of increases from 75bp. More volatility is expected this week as the U.K. and Canadian Consumer Price Index data will be released. FTX has also filed for bankruptcy. What does this mean for cryptocurrencies?
Also, the pound may face volatility due to the release of the U.K. financial report. What degree of austerity will UK Chancellor Hunt propose? And it’s still earnings season. Keep an eye on this week’s reports from major retailers like Target and Walmart.
Decided to start trading with US forex brokers on topbrokers.com? Don’t forget that during market opening many traders trade on emotions. A large number of market participants need to open new trades quickly. It is necessary to wait out the morning rush for the market to start reacting adequately to the current situation. Try not to open new deals at moments of high volatility. Because of the false signal, you can lose your money.
Consumer Price Index
Has U.S. inflation peaked? The U.S. Consumer Price Index released Thursday showed annualized inflation in October was 7.7%, below the expected 8% and below September’s reading of 8.2%.
Since June, monthly readings have been:
The headline print is heading in the right direction. The core consumer price index was 6.3% vs. the expected 6.5% and 6.6% in September (which was the highest reading in 40 years).
While the markets may have been a bit overextended, U.S. stock markets showed strong gains across the board as the U.S. dollar traded significantly lower and the DXY index was down nearly 3.85% for the week. Traders are now wondering if consumer price index data in other countries will also be weak.
Cryptocurrencies and FTX
The headlines in Wednesday morning’s newspapers were that cryptocurrency exchange FTX was unable to meet withdrawal requests, and a liquidity crisis ensued. Some feared the worst and still fear it could be the end for cryptocurrencies. BTC lost nearly 20% this week, while ETH lost nearly 19%.
FTX has filed for bankruptcy as of the end of the week. Stay tuned for more details as the story continues to unfold this week!