Unease ahead of US inflation

Another day of significant unease in financial markets as investors nervously await US inflation data and the start of earnings season.

The economic calendar goes up a couple of gears tomorrow, with RBNZ and BoC rate decisions bookending the US inflation data. Fifty basis point rate hikes are now the norm and the debate has shifted to how super-sized they’ll be, with a stronger US CPI number tomorrow potentially cementing another 75 from the Fed in a couple of weeks.

In anticipation of that, investors have retreated to the safety of the US dollar once more, steering clear of risky assets in favour of havens. The greenback has performed very well over the last week across the board but that’s been particularly evident against the euro as the pair this morning hit parity for the first time in 20 years.

A combination of factors have driven the move from aggressive Fed moves, increasing recession risks in Europe as the bloc faces a potential energy crisis this winter and higher ECB rates that could exacerbate the economic woes. Needless to say, we may be looking at a EUR/USD rate that starts with 0. for some time to come.

More pain ahead for bitcoin?

Even the most ardent of bitcoin HODLers must be questioning themselves at this point as bitcoin flirts with a move below USD 20,000 once more. I don’t think USD 20,000 is as critical a level as it was before given a couple of brief stints below but it’s certainly noteworthy that it repeatedly looks to dip below. A move below USD 17,500-18,500 support could accelerate the sell-off, while a break of USD 19,500 may also signal further pain to come.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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