Market Insight 140423
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Earlier today, German?monthly?WPI came out in line with expectations while French?monthly?CPI data, exceeded forecasts. The EUR/USD pair has been further boosted by the publication of the latest US PPI data. The later came out below forecast and lower than previous readings indicating that the Fed’s strategy to rein in inflation is being successful. The fibre is currently trading at 1.1066.
The IMF has downgraded its forecasts for the global economy, noting uncertainty in economic outlook amid financial sector turmoil. The IMF report highlights that the crisis in the banking sector has increased volatility and has contributed to shifting the risks to the downside. The global economy was already struggling with persistently high price levels, monetary policy tightening, elevated debt levels and the consequences of the war in Ukraine. However, the global economy is projected to experience modest growth of 3% this year, down 0.1% from previous projections. Inflation is expected to slide to 7% for the global economy in 2023 and to 4.9% in 2024
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Economic data reflected the fact that the US economy is indeed slowing down with yearly Producer Price Index figures dropping by 2.7% and first-time jobless claims, exceeding expectations, at 239K for the past week, following news that US inflation had dropped to 5% annually the previous day. Meanwhile investors are pricing in on gold and a pause in the Federal Reserve’s hiking pattern could spell a gold rush. The XAU/USD pair is pretty sparkly at the moment, currently trading at 2,042.16. Fed governor Christopher Waller will be discoursing about the economic outlook today and investors will be all ears for any cue about monetary policy in the context of the forthcoming FOMC. Retail sales, the Michigan consumer sentiment index and trade figures are also due in the course of the day.?The greenback is rolling back on previous gains over expectations of the Federal Reserve hitting the brakes on rate hikes and it was trading at 100.86 against major peers, at the time of writing.