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XTB TRADEBEAT

Equities move higher; USD dips as US CPI meets expectations

Summary:

  • Stock indices move higher after slow start
  • USD pulls back as CPI comes in inline 
  • TRY looks to recover from record lows
  • Bearish forecasts for Cryptos
  • SEK slips after Riksbank minutes

 Stocks have enjoyed a measured move higher today, with the US100 trading back near its record peak. Indices made a fairly slow start after Trump bashed Germany during a NATO summit but some positive remarks afterwards regarding the alliance boosted equities.  

The release this afternoon of the latest CPI data from the US was keenly anticipated but the immediate reaction in the markets has been fairly subdued. This is likely because the data itself was pretty much inline with expectations with the June CPI Y/Y coming in at 2.9% as expected and the M/M figure only slightly missing in falling to 0.1% from 0.2% previously. 

The Turkish Lira is attempting to make a recovery today, rising by more than 1% against both the Euro and USD after hitting its lowest ever level yesterday. The announcement earlier this week of a new Turkish cabinet was met with skepticism in the markets, with investors clearly concerned that Erdogan prioritised placing close allies into key roles over the most qualified candidates.   

Over the past 24 hours all major cryptocurrencies were falling again. The capitalization of the whole market sits a notch above $245 billion while the capitalization excluding Bitcoin stands below $140 billion. Cryptocurrencies have a lot of enthusiasts, but also a lot of critics. Joseph Stiglitz may be easily classified to the latter group. The famous economist joins a group of sceptical scholars towards virtual currencies.

The Swedish krona weakened slightly in the aftermath of the June’s inflation report as well as Riksbank minutes even as the central bank seemed to remain on course to deliver a rate increase later this year. First and foremost let’s notice that the inflationary report more or less matched economists’ expectations in June showing headline CPI accelerating to 2.1% from 1.9% (the consensus had pointed to 2.1%), and core price growth speeding up to 2.2% from 2.1% in May - this reading slightly missed the median estimate placed at 2.3%. 

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