The dollar US remains at levels not seen since March against a basket of six featured coins and hits a new 10-month high against the japanese yen.
In a financial journey marked by uncertainty and volatilitythe world stock exchanges continued their decline for the third day in a row, while European markets trade with instability. This situation is mainly due to the appearance of new signs of inflationary pressures persistent in the US and the increase in prices of energy around the worldfactors that strengthened the idea of keep interest rates higher for an extended period.
The data provided by the Institute of Management and Supply (ISM), which hit their highest since February on Wednesday, bolstered expectations that the Federal Reserve could raise interest rates again before the year is out.
Long-term Treasury yields are then at levels close to 4.28%marking two-week highs and approaching the highest levels of last monthwhich reminded investors of the previous financial crisis.
Dollar: interest rates and energy, the data that the market looks at
In the field of energy, Crude oil prices advanced approximately 0.5% due to to the decline in supply, which intensified concerns about inflation.
The broadest MSCI index of world stocks posted its third consecutive day of declinealthough the index pan-european STOXX 600 was struggling to avoid its seventh straight day in the red, experiencing its longest decline since February 2018. Wall Street futures were looking at an opening down 0.2%.
In Asian marketsvalues fell 0.9%with index Hong Kong Hang Seng and leading Chinese stocks losing nearly 1.3% each. The Australian index also fell 1.2%, while the japanese nikkei ended a streak of eight sessions to the rise with a fall of 0.75%.
Despite this challenging outlook, operators maintained the belief that the Federal Reserve will postpone any rate hike this month, and the risk of it doing so before the end of the year remained uncertain. At the moment, a rate cut is not anticipated until June.
In the words of Kyle Roddaof Capital.com in Melbourne, “The data doesn’t flip the script, but it does show that the fight against inflation is far from over“. Uncertainty persists as to the “neutral rate” that the market is looking for, which will continue to weigh on stocks and support the dollar.
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