Major US stock indices closed with gains last week and the US dollar index climbed to a one-year high. Meanwhile, Wall Street is digesting the shock inflation report for October. The US CPI surged higher-than-expected to 6.4% last month on a yearly basis. So, inflation in the US has been accelerating for a few months. How did the US stock market respond to the alarming data?
The S&P 500 closed last week with a 0.7% growth. In other words, the index has regained earlier losses and even headed upwards. Today the S&P 500 is trading at near 4,690. It is expected to rise to 4,700 today. Meanwhile, it is trading in a narrow corridor.
Notably, some businesses in the US are getting into gear on the back of soaring inflation, for example, the retail sector. However, economists realize that inflated consumer prices could trigger a tough counter-measure from the Federal Reserve. The central bank might raise interest rates earlier than expected. As a result, monetary tightening could cool down the economy. Besides, once the Fed raises rates, the rally in the stock market will not last for long.
The US dollar index opened on Monday at the highest level of the year. The index last traded at such highs in July 2020 when it rocketed to levels above 95 points. Now the technical picture signals a further uptrend. As a fundamental factor, soaring inflation also benefits the US dollar’s strength. Hence, the index is likely to oscillate between the borders of 94.70 and 95.20.
The USD/CAD pair is drifting higher amid the broad-based strength of the greenback. On Monday, the currency pair is trading at about 1.2530. It is expected to stick to the upper border of the corridor between 1.2480 and 1.2570. For a while, oil prices are vulnerable on the first trading day. Crude oil is affected by high inflation in the US and the EU. Nevertheless, there is always a scenario that the USD/CAD pair might decline again in case oil prices resume growth.
Bitcoin is extending strength. It recovered from the dangerous zone of 60-63,000 dollars. Indeed, if the crypto had dropped a bit lower, it would have tested support. So, the way would be open to a new bearish cycle. In practice, Bitcoin appreciated to 65,500 dollars per token. There are no fundamentals for the flagship cryptocurrency to slip below 65,000. On the contrary, experts are betting on its further growth.
The annual US CPI surged to the alarming 6.4% in October. No wonder, Bitcoin hit a new record high last week. It means that investors are seeking an asset to hedge savings against high inflation. Now investors are anticipating the launch of new ETFs, in particular by Grayscale Investments and BlockFi. This event will push Bitcoin to new peaks.
All in all, the US stock market is trading quietly on Monday. The burning issue remains runaway inflation that has been high on the agenda of the US President. Joe Bides has already commented that he has taken on the challenge. However, some experts doubt that the Federal Reserve and the US President have efficient tools for dealing with spiraling inflation. Subscribe to our channel and stay tuned!

00:00 Situation on the US market
00:34 S&P500
01:42 DXY
02:18 USD/CAD
03:00 Bitcoin
03:40 Crypto market
04:13 Resume

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