Jump to content

A drop in US inflation sends USD down, Nasdaq and Dow up

Recommended Posts

With both the core and the headline rate of consumer price inflation coming in lower than expected in the States, we look at the effect on the dollar and the stock market.

 Jeremy Naylor | Writer, London | Publication date: Thursday 10 November 2022

US inflation rates have come through lower than expected, both at the headline and the core rate, and what this has done is it's sent the dollar down and stocks up, and the markets are now pricing in the possibility of just 25 basis points now from the Federal Reserve (Fed) when it meets in mid-December just before that Christmas to New Year break.


That would certainly be a good line to take going into that meeting. And if we take a look at what's been happening first of all on the EUR/USD because we've got a rise here in the euro.

We're now just off the highs - we're touching this rising line of resistance. We've got this rising line of support in place now so it's a channel and we are now looking as though were comfortably above that parity level, currently trading at 10131.

The inflation headline rate coming at 7.7%. Now that's down from 8.2%. We were expecting an 8% reading. The core inflation, stripping out food and fuel, has come in at 6.3%. We have been looking for a 6.5% reading there.

Stock market

Now what this has done is it's seen money going into the stock market and this is the Dow Jones Industrial Average.

IG chief market analyst, Chris Beauchamp, suggesting this is the opportunity now for this bear market rally really to lift off as we go into the back end of the year, we're got about six weeks or seven weeks to go before the end of the year.

But with this inflation rate showing a lower print, we do have now this bit of a relief rally underway so far as tech stocks are concerned. Now this is an area of the market where we've seen a lot of underperformance. You can see now we've got a bullish engulfing candle here as well today on the Nasdaq one-day chart.

Now you don't know how this is going to develop until you get the next day. So we won't really know whether this is going to be the start of a new sort of mini-upside here until we get tomorrow's candle to work out whether this really is a a bullish engulfing candle, but you can see what the rise of 3.6% on the tech-heavy Nasdaq.

Even tech stocks are getting a lift from this news out today that inflation in the US is looking as though it's beginning to start to turn south.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 11:53

    Newest Member
    Joined 04/10/23 18:01
  • Posts

    • A lot of transformation is happening to BNB at the moment with the integration of bitcoin lightning network and Optimism especially with opBNB birth but that has not reflected in users confidence primarily because of the many negativities surrounding the platforms operations in North America and Australia. BGB on the other is gaining traction and value because a lot of investment is going into the development of the ecosystem recently with the injection of $100M and also improved partnership deals
    • I know we still have a lot to do to attract massive crypto adoption but steps like those taken by Binance and bitget in the wake of what happened to FTX is commendable in righting the wrongs of the lapses and loopholes that exist pre-FTX saga. But more still needs to be done to restore confidence to the level it was pre-2020 bear market like consistent regulatory framework and regular security updates by crypto platforms
    • Yeah, there's a 20 in a hundred chances for you to make that kind of ROI these though I'm not completely ruling it out because I'm one of the few that benefitted from PEPE rise to stardom amassing a return of 10x on bitget after it got listed on binance
  • Create New...