The U.S. Dollar is dominating in the midst of a deteriorating outlook for the global economy.
Overview
Traders and investors want to believe that the very worst of the supply chain has passed. Still, the current dynamics of the world’s economy are keeping prices inflated everywhere for basically everything. Inflationary gauges all across seem on hitting surprise expansion as the theory behind increased interest rates to combat inflation is starting to be heavily questioned.The logic behind many statements from central bankers has indicated a willingness to slow down what they perceive as a stubborn economy that has such demand it needs to be cooled down. Nevertheless, while outlooks keep being downwardly revised, there is an argument for improvement down the line as more countries fully open up and activity reengages in more than just commodities. However, the war threw a wrench at an already fragile globalized system, and in such chaos and uncertainty, there is nowhere for the buck to go but up. Volatility remains at all-time highs as traders start doubting central banks can sustain high rates for too long without the desired effect.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇓
The Euro fell this morning based on doubts about the ability of the European Central Bank to control the high levels of inflationary growth. Once more, Consumer Price Index figures grew as expected, and the yearly average stayed at 10.0%. Oil prices are going down some, but other key fuels that have now been almost entirely cut off by Russia remain near record highs.
As explained in our October Outlook, propane and other alternatives are being tried while nuclear options are also being kept from being buried away as planned. The mix of needing to borrow from the market to help national goals and political disagreement amongst nations seems to be keeping Euro down long-term.
GBP ⇓
Sterling fell as another round of inflationary gauges showed the U.K. remains under major price pressures. Suppliers’ PPI, Consumer CPI, and Retail RPI all came higher than expected. Indeed, the yearly average CPI is now above 10.0%. Frustration with the U.K. situation has been a theme, but it adds to the global question regarding central bank thinking and the need to once more set for a more accommodative environment.
