What to watch for on Thursday, October 20:
A sour mood in the markets benefited the US dollar on Wednesday, which extended its latest advance against its main rivals.
The day revolved around fresh inflation reports that reminded market traders of the high risk of an upcoming global recession. The European Union published the second estimate of the Retail Price Index Consumption September, which was revised down to 9.9% year-on-year, just below the 10% previously estimated. Core inflation was confirmed at 4.8%.
The UK also published the annual CPI for September, which was up 10.1% yoy, up from the previous 9.9% and also from the 10% forecast, marking a new multi-decade high. The reading, which excludes food and energy price volatility, rose 6.5% in the year to September, up from 6.3% previously.
Lastly, the Canadian CPI contracted in September, rising 6.9% year-on-year, compared to 7.0% in August. However, the Bank of Canada’s core CPI unexpectedly rose to 6.0%.
Stubbornly high inflation reignited Recession-related concerns as most central banks around the world are focused on bringing it down, regardless of the negative effects of their actions on economic growth. Persistent price pressures point to a continuation of the aggressive quantitative tightening.
Meanwhile, the US Federal Reserve Beige Book showed pessimism rising amid weakening demand and while price growth remained elevated, further fueling market concerns.
European and US indices closed in the red, reflecting the markets’ concern. Elsewhere, government bond yields soared, with the 10-year US Treasury note yield hitting 4.13% and the 2-year Treasury note yield peaking at 4.55. %.
The EUR/USD pair ended the day around 0.9770, while the GBP/USD settled at 1.1215. AUD/USD is currently trading at 0.6260, while USD/CAD is slightly higher at 1.3770. The USD/JPY pair is trading at a new all-time high, not far from the 150.00 threshold.
Gold has come under strong selling pressure and is currently changing hands at $1,629. Crude oil prices, meanwhile, managed to recover some ground, with WTI now trading at $84.30 a barrel.
Source: Fx Street
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