US dollar crumbles at first sign of peak inflation

The euro broke out of its three-week margin against the US dollar after a weak US inflation

Inflation

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country rises over a period of time. It is the rise in the general price level where a particular currency actually buys less than in previous periods. In terms of judging the strength of currencies, and by extension currencies, inflation or measures thereof are extremely influential. Inflation arises from overall money creation. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured by GDP). As such, this generates a demand pressure on a supply that is not increasing at the same rate. The consumer price index then rises, causing inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies at several levels. This includes purchasing power parity, which tries different purchasing power of each country according to the general price level. This makes it possible to determine the country with the highest cost of living. As a result, the currency with the higher inflation loses value and depreciates, while the currency with the lower inflation appreciates in the forex market. also affected. Excessively high inflation rates push up interest rates, causing the currency to depreciate on foreign exchange. Conversely, too low inflation (or deflation) pushes interest rates down, causing the currency to rise in the forex market.

Inflation is defined as a quantitative measure of the rate at which the average price level of goods and services in an economy or country rises over a period of time. It is the rise in the general price level where a particular currency actually buys less than in previous periods. In terms of judging the strength of currencies, and by extension currencies, inflation or measures thereof are extremely influential. Inflation arises from overall money creation. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean inflation. What leads to inflation is a faster increase in the money supply relative to the wealth produced (measured by GDP). As such, this generates a demand pressure on a supply that is not increasing at the same rate. The consumer price index then rises, causing inflation. How Does Inflation Affect Forex? The level of inflation has a direct impact on the exchange rate between two currencies at several levels. This includes purchasing power parity, which tries different purchasing power of each country according to the general price level. This makes it possible to determine the country with the highest cost of living. As a result, the currency with the higher inflation loses value and depreciates, while the currency with the lower inflation appreciates in the forex market. also affected. Excessively high inflation rates push up interest rates, causing the currency to depreciate on foreign exchange. Conversely, too low inflation (or deflation) pushes interest rates down, causing the currency to rise in the forex market.
Read this term report.

July’s CPI was in line with the month and below the consensus estimate of +0.2%. Core and year-over-year measures were also lower than expected.

The dollar fell across the board with the USD/JPY plunging 200 pips that day. That destroys Friday’s gains, which were strong non-farm payrolls

Nonfarm payrolls

Non-farm Payrolls (NFP) is the largest monthly economic news indicator released from the United States, usually on the first Friday of every month. Reported by the US Bureau of Labor Statistics, the NFP measures the increase or decrease in the number of employees in the past month, excluding those who work in the agricultural and agricultural industries. The NFP can also be referred to as an employment change, and is the most anticipated monthly report. Since it is released at the beginning of each month, it usually causes huge movements in the financial markets, especially in the foreign exchange market. Traders care about the NFP because job creation itself is one of the key indicators of consumer spending, a vital barometer supporting the country’s economy. NFP does not include agricultural jobs, primarily because these jobs are clearly seasonal, which can cause inconsistent reporting. Essentially, it represents all employees in business (excluding government employees), employees of private households and employees of non-profit organizations, accounting for about 80% of the employees who contribute to the GDP. Before the actual figure is released, industry experts make an informed guess about what the figure will turn out to be, known as the “expected figure” or “forecasted figure.” So if the actual figure released is higher than expected, it will employ more people than originally thought, which is great news for the economy. Such a result leads traders to invest in the US dollar, making it stronger. Likewise, if the actual figure is lower than the forecast, the US dollar typically weakens. This isn’t a hard and fast rule though, as other news items appear at the same time, plus revisions can make things extremely haphazard. How to Trade Non-Farm Payrolls Often traders wait seriously (or trepidation) for release, with significantly less trading activity right before release, often referred to as the calm before the storm, when a price squeeze occurs. Some traders trade these huge spikes (known as news traders), entering the market immediately after the figure is released, and just before the price makes its move. Depending on how much deviation there is from the expected figure, retail news traders try to capitalize on the fact that there is guaranteed to be a huge movement.

Non-farm Payrolls (NFP) is the largest monthly economic news indicator released from the United States, usually on the first Friday of every month. Reported by the US Bureau of Labor Statistics, the NFP measures the increase or decrease in the number of employees in the past month, excluding those who work in the agricultural and agricultural industries. The NFP can also be referred to as an employment change, and is the most anticipated monthly report. Since it is released at the beginning of each month, it usually causes huge movements in the financial markets, especially in the foreign exchange market. Traders care about the NFP because job creation itself is one of the key indicators of consumer spending, a vital barometer supporting the country’s economy. NFP does not include agricultural jobs, primarily because these jobs are clearly seasonal, which can cause inconsistent reporting. Essentially, it represents all employees in business (excluding government employees), employees of private households and employees of non-profit organizations, accounting for about 80% of the employees who contribute to the GDP. Before the actual figure is released, industry experts make an informed guess about what the figure will turn out to be, known as the “expected figure” or “forecasted figure.” So if the actual figure released is higher than expected, it will employ more people than originally thought, which is great news for the economy. Such a result leads traders to invest in the US dollar, making it stronger. Likewise, if the actual figure is lower than the forecast, the US dollar typically weakens. This isn’t a hard and fast rule though, as other news items appear at the same time, plus revisions can make things extremely haphazard. How to Trade Non-Farm Payrolls Often traders wait seriously (or trepidation) for release, with significantly less trading activity right before release, often referred to as the calm before the storm, when a price squeeze occurs. Some traders trade these huge spikes (known as news traders), entering the market immediately after the figure is released, and just before the price makes its move. Depending on how much deviation there is from the expected figure, retail news traders try to capitalize on the fact that there is guaranteed to be a huge movement.
Read this term report.

The implied probability of a 75 basis point increase on the Sept. 21 FOMC has fallen to 37% from 68% yesterday as the market felt peak inflation. We’ll get another CPI report before then, but with gasoline prices continuing to fall, there’s a good chance it’s low as well.

Along with the decline of the dollar, US stock futures are up 75 points, or 1.8%.

Notably, the US dollar was curiously weak ahead of the data. Some traders noted that the White House had not announced anything in advance about CPI. Previously, they had “prepared” the public. Before the earlier release, the White House said it expected the June reading to be “very lofty.” This time it was silence and whether that was intentional or not, some saw it as a tip.

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