Dollar Eases As Inflation Slows

STATE OF THE MARKETS

Dollar eases as inflation slows. As US stocks closed mixed again on Wednesday, with Dow (+0.62%) and S&P (+0.25%) reached record high and Nasdaq (-0.16%) edged lower; Dollar index (DXY) eased off the 93 handle after report showed that July inflation slows from 0.9% to 0.5% and core slowed from 0.9% to 0.3% as year on year figure slowed from 4.5% to 4.3%. The new dynamics changed Fed’s tapering sentiments, sending the 10Y benchmark to as low as 1.30% before settling around 1.34%.

In the commodities market, early sell off in crude futures was offset as news hit the wires that the Biden administration would not meddle in OPEC+ territories. The black gold closed with a bullish hammer around $69.25/bl. On another note, gold received renewed demand after the inflation report, settling above $1,751/oz as New York closed.

In the FX space, demand for King Dollar eased further in the short term, though remains elevated in the medium and long term. Sentiments in the short to medium term are on obvious improvement as Swiss and Yen remain on offer. Short term traders returned to bidding Sterling and Euro as demand for Loonie and Dollar eased.

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