Inflation fell in the US - 11.11.2022

On Thursday, the US dollar index fell sharply due to the reduction of inflation in the US. In October, it fell below 8% for the first time in 8 months and amounted to 7.7% y/y. This is the minimum since January this year. Now investors expect not only a slowdown in the rate of growth of the Fed rate, but also its relatively low maximum - no more than 5%. According to CME FedWatch, at the meeting on December 14, the Fed rate can be increased by only 0.5% with a probability of 81%. A week earlier, the probability was much lower at 52%. Recall that now the rate is 4% and is already close to the United States Core Consumer Price Index (CPI), which fluctuates around 6% per annum this year. Thus, the weakening of the US dollar was a reaction to the expectations of an early completion of the Fed rate hike. Inflation in Germany was published this morning. In October it rose to 10.4% y/y. This helped strengthen the euro as market participants look forward to a further increase in the European Central Bank (ECB) rate, which currently stands at 2%. The British pound continues to strengthen this morning. United Kingdom Gross Domestic Product turned out to be slightly better than expected.

Bitcoin corrected up yesterday after a massive fall due to problems with the FTX Cryptocurrency Exchange. Players hope to accelerate the development of American rules for regulating the crypto market after the elections to the US Congress.

Yesterday, US stock indices rose of course. Investors expect the Fed rate hike to be completed in the foreseeable future and that it will not exceed 5%. Low lending rates increase the profitability of corporate business. Yesterday's daily growth of the S&P 500 by 5.5% was the highest in the last 2 and a half years. Michigan Consumer Sentiment for November will be released today in the US. Investor activity may be reduced due to the celebration of Veterans Day in the US, but the main exchanges will remain open.

Today, oil prices are rising for the 2nd day in a row. Market participants hope for an increase in business activity and demand for hydrocarbons against the backdrop of signs of recovery in the US economy in the form of lower inflation. An additional positive could be reports of easing anti-coronavirus measures in China.

Natural gas quotes in Europe on the ICE Dutch TTF are trading at about $1,100 per 1,000 cubic meters. It is likely that $1,000 per 1,000 cubic meters has now become a support level for European gas prices.

Copper rose in anticipation of increased demand due to an expected recovery in industrial activity in the world, as well as a reduction in copper ore production in Chile and Peru.