US Open Note – Yen and oil surge as futures are steady

US inflation mildly affects dollar

US inflation had a mild negative influence on the dollar, but yesterday's fragile risk sentiment gave it a boost. This suggests that markets believe the Fed will delay tapering next week, which might lead to a range bound environment until the end of the week. In addition, China's efforts to rein in private enterprises and the impact of the delta virus strain on economic development are among them.

The US dollar index is heading south around the 50-day simple moving average (SMA), which is acting as a significant barrier, while dollar/yen is losing momentum, approaching the 109.00 psychological mark. The futures of S&P 500 are finding powerful support at the 50-day SMA and the long-term ascending line, suggesting a positive open as well as for the Nasdaq 100. The futures of Dow Jones are pointing for a negative open, creating a somewhat bearish correction. Euro/dollar rebounded off 1.1800 today.

UK CPI higher than expected; sterling slightly up

The CPI for August in the UK was higher than projected. Overall, the headline index increased by 3.2% year-over-year, compared to the predicted 2.9% and 2.0% in the previous month of July. The short sterling strip is completely pricing in a Q1 2022 start for higher rates and two hikes in 2022. First, the BoE expects inflation to surge this year, but believes it will be temporary. Saunders, a member of the MPC, has pushed back against excessive predictions of market tightening. There will be a new Bank of England decision due on September 23.

Canadian CPI increases before elections

Canada’s inflation data came out today with the August CPI increasing to 4.1% from 3.7% before; however, the main event for the loonie are the upcoming elections. The aussie and the kiwi are remaining flat after a negative day.

Oil surges above $71

Oil prices attempted to consolidate a technical breakout this week, after the advance of $71.00/per barrel However, the possibility that China may continue to release additional oil from its strategic stockpiles will remain a wildcard to watch. Gold prices are stable around $1,800/per ounce.

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