Morning Minutes

US Dollar Climbs, Markets Backslide As Inflation Pressures Increase



US index futures are down 0.1% to 0.4% this morning, adding to yesterday’s 0.3%-0.6% losses for the three main US indices. So far this appears to be a normal trading correction after US indices reached new all-time highs earlier in the week. Overseas market action has been mixed with the FTSE climbing 0.5%, the Hang Seng gaining 0.75%, the Dax slipping 0.1% and the Nikkei falling 0.6%. With tomorrow being a partial holiday (banks and government offices) for Remembrance/Veterans Day, its possible some investors may be less eager to make moves this week.  

Another culprit for equity and commodity market softness appears to the US Dollar which is broadly climbing today on a combination of the Fed turning hawkish and deciding to taper asset purchases last week, and persistently high inflation keeping central banks’ feet to the fire. While steady relative to the Canadian Dollar, the US Dollar is up 0.2% against gold, 0.3% against the Euro, Yen and Pound, and up 0.5% against WTI crude oil.

Overnight, China announced that inflation pressures continue to build, with both producer prices (13.5% vs street 12.4% and previous 10.7%) and consumer prices (1.5% vs street 1.4% and previous 0.7%), rising more than expected. US consumer price growth announced this morning also accelerated more than expected (6.2% vs street 5.3% and previous 5.4%).  The decline in oil today is a bit surprising considering that API announced a weekly inventory drawdown last night (-2.4 mmbbls vs previous +3.6 mmbbls). US DOE weekly oil inventories are due at 10:30 am EST (street 2.1 mmbbls).

It’s a relatively quiet day for corporate news. Walt Disney is scheduled to report quarterly earnings after the close. Cryptocurrency exchange Coinbase is down 9.6% premarket after missing street expectations on revenues ($1.31B vs street $1.57B).

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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