Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
ATFX

FCA License No: 760555

ATFX-search-icon
Client Portal
Start trading
rch

How would today's CPI release affect commodities & cryptocurrencies?

US Dollar Yields Higher

The US dollar has exerted so much pressure on other pairs in the market this week. This is all the more so as uncertainty regarding the outcome of the Consumer Price Index CPI to be released today; has kept investors from making major decisions on other pairs. The dollar index has shown massive gains this week, with a significant 1.2% increase, bringing the price to 103.5 during the Asian session today. This is undoubtedly the biggest gain for the dollar in the past two months.

Analysts believe this might only be the beginning of a new phase of dollar dominance should the CPI report be released during the New York session today. A fall below the target will force the Fed to take a more hawkish stance next week during the Fed's session to further hike the interest rate. This week, many currencies paired with the USD had been pushed back to their previous lows.

EURUSD, for instance, had retested a new all-time-low yesterday at 1.06100. The same was applicable for GBPUSD, which fell to 1.24790 during the Asian session today. Gold and Silver have been thrown into a ranging market in the last two days, with gold hovering above 1840 and Silver at 21.640. The stock and crypto market has been down, too, as investors have been eager to safely guide their capital in the face of the current uncertainty.

Understanding the CPI and its impact on the market

The Consumer Price Index (CPI) measures the change in the price of goods and services given to consumers. This monthly data by the Bureau of Labour Statistics helps determine the overall inflation rate.

The outcome of this report is significant as higher reading shows inflation has not been curtailed.

Thus, any further increase from this data will push the Fed to hike the interest rate more aggressively during next week's next Fed session. The previous reading for this data is 0.3%, while the forecast is 0.7%. A higher reading would mean temporary bearishness for the dollar until the next Fed meeting. They will be expected to increase the interest rate for the dollar to stand firm again.

Added to this is the Core CPI, which will be given alongside it also.

The Core CPI measures the change in consumer goods and services prices, excluding food and energy. More attention is given to this later data as it comprises the more significant part of the CPI report and serves as the primary point for determining the rising inflation rate. The forecast for this data is 0.5%, while the previous reading is 0.6%.

What effect will the CPI data have on Commodities and Cryptocurrency prices?

As expected, the outcome of the CPI data will exert substantial volatility in the market today. Higher reading from this data shows inflation is still increasing rather than diminishing. This will push investors back to risk-on mode to invest in Crypto and stocks. An emerging weakening dollar will favour Gold and Silver, the two major commodities.

On the contrary, should the data come out lower than forecast, indicating that the previous interest rate hike had gradually reduced inflation? The effect is that the dollar will be stronger and discount on other pairs, including cryptocurrency and commodities.

Last Updated: 10/06/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

Recent news

Recent news
Gold Market Fears Interest Rate Hike From The Fed

US ISM Services data offered hawkish Fed policy estimates, indicating that the USDX has fo...

Recent news
Crude Oil Price Seeks The Next Bottom Amidst Rate Hike Fears

Crude oil markets were hit with selling pressure. Russian supplies face a new Western ban ...

Recent news
Trading USDCAD on Dual Employment Figures

This article looks at the USDCAD exchange rate, which has an employment release ahead of F...

Recent news
USDJPY Continues Lower with Kuroda Speech

USDJPY has collapsed from our previous sell ideas and could continue lower. The day ahead ...

Recent news
Is EURUSD Ready for a Reversal?

The EURUSD exchange rate has been finding resistance at the 1.04 level and could be ready ...