Here’s what you need to know on Wednesday, December 11:
He US dollar (USD) remains resilient against its major rivals early Wednesday, with the USD index holding comfortably above 106.00. The US Bureau of Labor Statistics will release Consumer Price Index (CPI) data for November. Additionally, the Bank of Canada (BoC) will announce monetary policy decisions after the last meeting of the year.
US dollar PRICE this week
The following table shows the percentage change of the US dollar (USD) against the major currencies traded this week. The US dollar was the strongest against the Japanese yen.
| US dollar | euros | GBP | cool | SCOUNDREL | AUD | new zealand currency | CHF | |
|---|---|---|---|---|---|---|---|---|
| US dollar | 0.55% | -0.07% | 1.08% | 0.16% | 0.53% | 1.07% | 0.64% | |
| euros | -0.55% | -0.61% | 0.64% | -0.31% | 0.06% | 0.61% | 0.16% | |
| GBP | 0.07% | 0.61% | 1.08% | 0.30% | 0.67% | 1.23% | 0.77% | |
| cool | -1.08% | -0.64% | -1.08% | -0.94% | -0.46% | -0.13% | -0.37% | |
| SCOUNDREL | -0.16% | 0.31% | -0.30% | 0.94% | 0.41% | 0.92% | 0.46% | |
| AUD | -0.53% | -0.06% | -0.67% | 0.46% | -0.41% | 0.55% | 0.10% | |
| new zealand currency | -1.07% | -0.61% | -1.23% | 0.13% | -0.92% | -0.55% | -0.46% | |
| CHF | -0.64% | -0.16% | -0.77% | 0.37% | -0.46% | -0.10% | 0.46% |
The heat map shows the percentage changes of the major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the US dollar from the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will represent USD (base)/JPY (quote).
Cautious market sentiment helped the dollar find demand during US trading hours on Tuesday. Additionally, the benchmark 10-year US Treasury bond yield rebounded above 4.2%, further supporting the currency. On an annual basis, the CPI is expected to rise 2.7% in November, following a 2.6% increase in October. The core CPI, which excludes volatile food and energy prices, is expected to rise 0.3% monthly. Ahead of this key CPI report, US stock index futures rose slightly during the day.
USD/CAD rose on Tuesday and touched its strongest level since April 2020 near 1.4200. The pair remains in a consolidation phase above 1.4150 in the European morning on Wednesday. The BoC is expected to reduce the policy by 50 basis points to 3.25%. BoC Governor Tiff Macklem will deliver the policy statement and answer questions at a press conference starting at 15:30 GMT.
EURUSD It closed slightly lower on Tuesday and continued lower early on Wednesday. However, the pair manages to hold above 1.0500 at the beginning of the European session.
GBP/USD failed to gain bullish momentum and posted small gains on Tuesday. The pair remains relatively calm around 1.2750 during the European morning.
Data from Japan on Wednesday showed the producer price index rose 3.7% year-on-year in November, beating market expectations of 3.4%. After closing in green on Monday and Tuesday, USD/JPY drops and trades near 151.50 on Wednesday.
Gold retained its bullish momentum after Monday’s rally and posted strong gains on Tuesday. After testing $2,700 in the Asian session on Wednesday, XAU/USD corrected lower and was last seen trading around $2,690.
Inflation FAQ
Inflation measures the increase in the price of a representative basket of goods and services. Headline inflation is usually expressed as a month-over-month (MoM) and year-over-year (YoY) percentage change. Core inflation excludes more volatile items, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the variation in prices of a basket of goods and services over a period of time. It is usually expressed as a month-over-month (MoM) and year-over-year (YoY) percentage change. The core CPI is the figure central banks target as it excludes volatile food and fuel inputs. When the core CPI rises above 2%, it typically leads to higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation generally results in a stronger currency. The opposite occurs when inflation falls.
Although it may seem counterintuitive, high inflation in a country drives up the value of its currency and vice versa to reduce inflation. This is because the central bank will typically raise interest rates to combat higher inflation, which attracts more global capital inflows from investors looking for a lucrative place to park their money.
Previously, gold was the asset investors turned to in times of high inflation because it preserved its value, and while investors often continue to purchase gold for its safe haven properties in times of extreme market turmoil, this is not the case. most of the time. . This is because when inflation is high, central banks will raise interest rates to combat it. Higher interest rates are bad for gold because they increase the opportunity cost of holding gold versus an interest-bearing asset or placing money in a cash deposit account. On the other hand, lower inflation tends to be positive for gold as it lowers interest rates, making the shiny metal a more viable investment alternative.
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