Inflation (US CPI) Rises, So Does US Dollar (USD)! (SPX) S&P 500 And Nasdaq Have Decreased! Is Hawkish Fed Going To Hunt Again? | FxPro |

Forex: GBP/USD. The Support Has Been Rejected 3 Times. Uptrend!

The dollar got a fresh boost, with stocks coming under renewed pressure after a new batch of US inflation data.

The annual inflation rate slowed from 8.5% to 8.3%

The US consumer price index rose 0.3% in April after 1.2% a month earlier. The annual inflation rate slowed from 8.5% to 8.3% but was higher than the expected 8.1% y/y. Particularly worrying for markets is the development of core inflation. The corresponding index added 0.6% m/m and 6.2% y/y last month, higher than the expected 0.4% and 6.0%, continuing the sprawl of inflation.

Higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response

While the annual rate of core and core inflation seems to have peaked, higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response. With inflation far from the 2% target, the Fed will be inclined to act faster (raise rates more than 50 points at a time) or stop hiking at a higher level.

US inflation has brought back demand for the dollar - 1

A significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021

Locally, we see a tug-of-war around the dollar against the euro and yen near the lows of the past two weeks and swings against the pound and the franc near this week’s extremes. However, a significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021.

The S&P500 and Nasdaq futures were also pushed back to this week’s lows, indicating continued bearish pressure.
Forex: GBP/USD. The Support Has Been Rejected 3 Times. Uptrend!

Alex Kuptsikevich

Financial market professional with 16-years' experience and Senior financial analyst at FxPro. Author of daily reviews on the impact of economic events with comments regularly featured in top international and Russian media. Covers fundamental analysis, global markets, foreign exchange market, gold, oil, cryptocurrencies.

Alex Kuptsikevich is a regular contributor to both digital and print media including CNBC, Forbes, Reuters, MarketWatch, BBC and Coindesk.