Inflation (US CPI) Rises, So Does US Dollar (USD)! (SPX) S&P 500 And Nasdaq Have Decreased! Is Hawkish Fed Going To Hunt Again? | FxPro |

The dollar got a fresh boost, with stocks coming under renewed pressure after a new batch of US inflation data.

The annual inflation rate slowed from 8.5% to 8.3%

The US consumer price index rose 0.3% in April after 1.2% a month earlier. The annual inflation rate slowed from 8.5% to 8.3% but was higher than the expected 8.1% y/y. Particularly worrying for markets is the development of core inflation. The corresponding index added 0.6% m/m and 6.2% y/y last month, higher than the expected 0.4% and 6.0%, continuing the sprawl of inflation.

Higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response

While the annual rate of core and core inflation seems to have peaked, higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response. With inflation far from the 2% target, the Fed will be inclined to act faster (raise rates more than 50 points at a time) or stop hiking at a higher level.

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A significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021

Locally, we see a tug-of-war around the dollar against the euro and yen near the lows of the past two weeks and swings against the pound and the franc near this week’s extremes. However, a significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021.

The S&P500 and Nasdaq futures were also pushed back to this week’s lows, indicating continued bearish pressure.