Today, the US dollar index has climbed considerably during the Asian session. So, at the end of the week, it may gain 1% following data on the highest inflation rate in three decades. How may this rally affect other currencies and market sentiment? Watch our video review and find out.
The US dollar index gained momentum after the release of the US inflation report. Annual inflation in October rose to the highest level since 1990, amounting to 6.2% versus a September reading of 5.4%. As a result, the US dollar index has been growing for the third day in a row. Since the beginning of the week, it has already climbed by about 1%. Following the report, the lion’s share of market participants are expecting the Fed to hike the key rate earlier than planned.
The index has already reached 95.2. So, it is just a matter of time before it approaches 95. After that, a small correction may occur as the US index is now overbought. Yet, it is likely to remain in the range between 95 and 96 for some time.
Meanwhile, the dollar/yen pair maintains its moderate growth amid the strengthening of the greenback. If the pair consolidates above the target level of 114.40, it may climb even higher. The risks of a correction will be minimized as well. Yet, analysts believe that the pair may retreat immediately after reaching the target level. Some technical indicators confirm such a scenario. So, the price may touch 114.40 and then bounce back from this level, slowing down its rise for a while.
The Aussie remains weak against the US dollar. The AUD/USD pair has been declining due to the fact that Australia's iron ore shipments to China are slowing in parallel with a drop in prices of the key steel-making ingredient. Australia, the world's largest iron ore producer, is facing hard times as the price and exported volumes of this commodity are dropping because of China's real estate and environmental problems. This is why the Australian currency is likely to continue its downward movement. Now, the pair is trading at 0.7290. However, it may soon decrease to at least 0.7280.
Currently, market participants are awaiting crucial economic reports from the euro area and the US. Eurostat is going to unveil eurozone industrial production data for September. Later, the University of Michigan will publish the preliminary November consumer sentiment index that reflects consumers’ confidence in the US economy. After studying this data, we will be able to make a more detailed forecast for the next week. That’s all for now! Don't forget to subscribe to our channel and leave your feedback in the comments below. See you!
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