HomeContributorsFundamental AnalysisPound Gives Up Gains after UK Inflation; Dollar Awaits US PPI

Pound Gives Up Gains after UK Inflation; Dollar Awaits US PPI

Here are the latest developments in global markets:

FOREX: UK headline CPI picked at a fresh six-year high of 3.1% y/y in November, increasing the odds for further rate hikes in the coming years as the BOE wishes to bring inflation back to its target of 2.0%. The pound jumped to a session high of $1.3379 but soon fell back to $1.3310 (-0.04%). as investors remained cautious on the squeezed wage growth. The euro slipped to $1.1774 but remained flat on the day after the German economic sentiment measured by the ZEW Institute missed expectations. The dollar index was moving sideways around 93.80, while the kiwi stretched towards a fresh one-month high of $0.6950. The aussie approached a one-week high of $0.7575.

STOCKS: A rise in tech shares pushed European stocks higher on Tuesday after the French Atos SE, a global leader in digital transformation proposed to acquire the Dutch Gemalto NV, making it the biggest acquisition offer this year. The pan-European STOXX 600 was 0.15% up at 1000GMT, the French CAC 40 increased by 0.24%, while the Dutch AEX 25 surged by 0.40%. The British FTSE 100 slipped in the wake of the UK’s CPI readings but managed to recover afterwards, gaining 0.21%.

COMMODITIES: Brent broke above a two-year high of $65.59 (1.38%) per barrel on news that Britain’s largest pipeline was shut down for an unscheduled repair, restricting a significant amount of crude oil supply. WTI crude climbed by 0.53% to a two-week high of $58.40 per barrel. Gold was steady at $1,243.80 per ounce.

Day ahead: US producer prices eyed; FOMC meeting begins

Next on the day’s agenda, the US Bureau of Labor Statistics will release figures on producer prices, with analysts projecting the PPI to hit a fresh two-year high in November, edging up by 0.1 percentage points to 2.9% y/y. Month-on-month, though, the index is said to slow down by an equivalent percentage to 0.3%.

Regarding central bank meetings, the FOMC members will gather to decide on interest rates later today, with the decision expected to be announced on Wednesday at 1900 GMT. Despite a third-rate hike being priced in by the markets, investors will scrutinize the monetary policy statement following the rate announcement and will keep a close eye on the Fed chair Janet Yellen’s news conference at 1930 GMT for clues on the path of future rate hikes.

In energy markets, the American Petroleum Institute will report inventory levels on US crude oil, gasoline and distillate stocks for the week ending December 8 at 2130 GMT.

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