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US Dollar Climbs, Markets Backslide As Inflation Pressures Increase

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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).

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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