USD Gets Crushed on Inflation Data

Weakness continued for the US Dollar as it sold off overnight despite inflation data coming in at a 40-year high.

US CPI for December grew 7% YoY, exactly in-line with what the market had been anticipating. Traders seemed to take this as an opportunity to unwind long positions in the greenback, as the result likely confirms the Fed will not look to further accelerate their plans to raise interest rates.

As a consequence, gold and other major currencies were trading significantly higher against the USD, with a number of forex pairs breaking out overnight.

For a deeper analysis into the various markets benefiting from the news and key levels to trade off, check out this article by one of our senior analysts:

7% is such a high number and considering wages and income are stagnant its a really worry not just for US but the EU and UK

You’re right. At a 40-year high, the data is quite concerning. However, given that the market was already anticipating such a hot print, policy makers and investors alike might see this as the peak for inflation.
Should be interesting to see how it unfolds over the next few months and what action the major central banks take.

Currently dealing with the inflation here and it’s insane. I have 3 kids and we already spend enough on groceries, but diapers have gone up alongside them and I’ve spent around $6 on a gallon of milk just recently. Just spent $300 on groceries today and honestly it wasn’t that much.