US Dollar Index struggles to recover 100.00 ahead of US CPI, Asian markets plunge

  • The DXY faces barriers around the critical 100.00 figure.
  • Investors await the release of the US CPI for more details.
  • Chinese markets are bleeding from rising CPI and lockdown measures in Shanghai.

The US Dollar Index (DXY) is struggling to recover the magic number of 100.00 ahead of the US Consumer Price Index (CPI) release, which is due on Tuesday. US inflation is a major catalyst that will stem from the likely monetary policy action of the Federal Reserve (Fed) in May. The greenback’s powerful basket fails to retake 100.00 despite bleeding Asian markets, which favor a risk impulse amid negative market sentiment.

US CPI estimate

A preliminary US CPI estimate of 8.3% paints an uncertain picture for the market. US inflation is rising sharply, supported by rising prices for base metals, oil and energy, and food prices. Therefore, investors should prepare for higher volatility in upcoming trading sessions and an aggressive rate hike from the Fed. Also, the tight labor market calls for a giant interest rate from the Fed.

Bloodbath in Asian markets

Asian markets experienced a bloodbath on Monday as a stretch in Chinese inflation reduced the chances of another rate cut by the People’s Bank of China (PBOC). China’s annual consumer price index (CPI) landed 1.5% higher than street expectations and previous figures of 1.2% and 0.9% respectively. At press time, Hang Seng plunged 2.80%, China A50 2.55%, Japan’s Nikkie225 0.75% and Indian exchanges 0.50%. Moreover, with the containment restrictions in Shanghai, China has renewed fears of a drop in demand.

This week‘s key events: Consumer Price Index (CPI), Producer Price Index (PPI), Initial Jobless Claims, Retail Sales, Michigan Consumer Sentiment Index (CSI), and Industrial Production.

Significant problems on the rear boiler: Russia-Ukraine peace talks, Reserve Bank of New Zealand (RBNZ) interest rate decision, European Central Bank (ECB) interest rate decision and interest of the Bank of Canada (BOC).

Comments are closed.