Daily summary – Bulls are strong again but fight with inflation is far from over

8:26 PM August 12, 2022

  • US indices continued gains on Friday and major indices are set for the 4th weekly gain in a row
  • Nasdaq is up more than 1.4% and S&P 500 is slightly above 1% gain
  • Traders further reduced bets on Fed raising rates. Currently, there is only 40% probability of 75 pb hike
  • UK GDP increased 2.9% YoY according to preliminary report which is higher than 2.8% YoY expected. On the other hand, GDP contracted 0.1% QoQ but it was higher than estimated loss of 0.2% QoQ
  • Preliminary University of Michigan Sentiment Index rose to 55,1 from 51,5 in July and it is highest in 3 months. Moreover, inflation expectations decreased to 5% over the year (from 5,2% in July) and long-term inflation expectations are slightly higher at 3% in comparison to 2.9% in July.
  • Export and import prices in the US decreased more than expected in July. Export Price Index decreased 3.3% MoM and Import Prices decreased 1.4% MoM
  • The drought in Europe is causing euro weakness in the end of the week. EURUSD is below 1.0300, when after inflation release the pair tested vicinity of 1,0400
  • However, Dollar index is set to print a weekly decline. Mary Daly said on Thursday that recent inflation data may indicate 50 bp hike in September, but of course the fight with inflation is not yet over.
  • The Swedish krona was the worst G10 currency today and lost about 1.5% on Friday as inflation was weaker than expected but still the highest in three decades. Lower inflation may lower a probability of further rates increases by Riksbank
  • Oil decreased more than 2% on Friday as oil flows from Russia to southern European countries are set to return today. Moreover, Iran said that it can accept European Union brokered nuclear deal if it receives some guarantees.
  • As greenback bulls has returned to the market on Friday, crypto market was losing its ground. Bitcoin fell for a moment below $24k


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