Has the USD gone too far ahead of inflationary data?
The stock markets rose sharply last week as US inflation came in lower than anticipated, thus supporting the prospects of a dovish tilt by the Federal Reserve. Once again, markets showed that inflationary data is what makes them move. The US-dollar has had quite the rally this year, especially after Powell´s hawkish speech in Jackson Hole late August.
US-inflation came
in at 7,7 per cent in October, against an expected 8,0 per cent with Core
inflation coming in at 6,3 per cent, under the expected 6,5 per cent. Amidst
the release of the inflationary figures, S&P500 rose by 5,5 per cent and
tech tilted Nasdaq by a whole 7,4 per cent. Next inflation figure release will be
on 13 December, one day ahead of the Fed´s interest rate decision. As of today,
markets are pricing in a 50bp change to a rate of 4,5 per cent with a
probability of 80,6.
From here, the US
dollar might be offering an interesting entry point ahead of the Feds rate
decision release on 14 December. Hence, one is taking a bullish position in the
US dollar on the belief of a continued hawkish tone from the fed and a 50bp
rate increase in December. As UK inflation data will be released on Wednesday
and might give some additional volatility, we see the USD/SEK-trade as more
attractive.
USD/SEK, daily 12-month price chart
Bull & Bear-Certificates
USD/SEK, weekly five-year chart
The full name for abbreviations used in the previous text:
EMA 9: 9-day exponential moving average
Fibonacci: There are several Fibonacci lines used in technical analysis.
Fibonacci numbers are a sequence of numbers in which each successive number is
the sum of the two previous numbers.
MA20: 20-day moving average
MA50: 50-day moving average
MA100: 100-day moving average
MA200: 200-day moving average
MACD: Moving average convergence divergence
Risks
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