US Dollar Index Forecast, News and Analysis

The Bank of England says the figure will reach deep into double-digit territory in the coming months. Yesterday, in another consequence from steepling inflation levels, it emerged that real levels of UK pay fell at the fastest rate for more than 20 years. The increase to the Consumer Prices Index (CPI) was higher than xcritical reviews economists’ forecasts of 9.8% and will pile extra pressure onto consumers and households already in the grip of a cost-of-living crisis. UK inflation rose to a fresh 40-year high of 10.1% in the year to July 2022, according to the latest figures from the Office for National Statistics (ONS), writes Andrew Michael.

1. Although UK inflation has continued on a broadly downward trend since February, recent news from the ONS about accelerating wage growth suggests the spectre of inflation has not disappeared.
2. The news will add extra pressure to already stretched household finances, as consumers grapple with the worst cost-of-living crisis in years.
3. The service sector saw an 0.1% fall in August after growing 0.3% in July while construction grew by 0.4% on the back of a 1.9% increase in new building projects.
4. The Bank of England (BoE) has announced extra measures to keep the UK’s financial markets working, following last month’s turmoil that affected the pensions industry in the wake of the government’s mini-Budget, Andrew Michael writes.

The Bank of England will also announce its next decision on the Bank Rate – currently 3% – on 15 December. A day later, the Bank of England and the European Central Bank will separately announce their last rate-setting decisions of the year. According to the Bureau, housing “was by far the largest contributor to the monthly all-items increase, more than offsetting decreases in energy indexes”. “Markets may be thinking a soft landing will be achieved and that a pause or a pivot back to looser monetary conditions could soon return, but the Fed’s hawkishness won’t simply end on one piece of good news. Both the Bank of England and the Fed are tasked with maintaining inflation over the long term at a level of 2%.

Nov: Inflation Near 10-Year High, Prompts Rate Hike Expectations

At the same time, the UK’s central bank warned that inflation could reach 11% later this year. Energy costs are set to soar in October in line with an anticipated rise in the energy price cap, announced by Ofgem, the energy regulator. The BoE’s announcement follows last week’s decision by the Federal Reserve, the US central bank, to raise its target benchmark interest rate by 0.75 percentage points to a range between 2.25% and 2.5%.

Inflation, as measured by the Consumer Price Index (CPI), rose by 5.1% in the 12 months to November 2021 – its highest level in over a decade – according to the latest figures from the Office for National Statistics (ONS). UK inflation, as measured by the Consumer Prices Index, jumped to 5.4% in the 12 months to December 2021 – its highest level in 30 years – according to the latest figures from the Office for National Statistics (ONS). Last month, faced with the same inflationary headwinds affecting all major economies, the Bank of England (BoE) increased the Bank rate from 0.25% to 0.5%. This was the second increase in the space of three months, following a rise from 0.1% to 0.25% in December 2021. In addition to imposing sanctions on Russia’s central bank and excluding the country from the global financial system, the US administration, led by President Joe Biden, has banned imports of Russian oil and gas.

June: US Inflation Soars To 40-Year High

Similarly, if the index is currently 80, falling 20 from its initial value, that implies that it has depreciated 20%. Since I wrote my last analysis, I find that despite the surging hopes for a rate cut of 25 basis points by the Fed in its meeting on Jan.30-31, gold futures continued to witness… The Gold Price Stays High Despite a Hawkish Message From the Fed
The gold (XAU) price rose above 2,050 on Wednesday but failed to hold the level and decreased after Jerome Powell,… Investing.com– The Federal Reserve is now expected to begin cutting interest rates in May 2024, according to the CME Fedwatch tool, after Chair Jerome Powell shot down bets on a…

September: Annual Trend Down Despite Month-On-Month Uptick In Prices

In recent weeks, central banks worldwide have warned that borrowing costs could remain at elevated levels until well into next year to keep up the pressure on inflation. Despite the welcome fall in inflation, the UK figure remains elevated when compared with official data from both the US and the Eurozone where prices are rising on an annual basis by 3.1% and 2.4% respectively. UK inflation also stands at more than double the 2% long-term target commonly adopted by central banks worldwide. The latest inflation figure from the BLS has put the Federal Reserve, the US central bank, under pressure to abandon its monetary policy guidance for the second month in a row and raise interest rates by a full percentage point at the end of this month. Despite today’s announcement, inflation remains in double figures thanks to a combination of soaring energy prices exacerbated by the war in Ukraine and global supply chain bottlenecks in the wake of the pandemic. The European Central Bank (ECB) will announce its latest monetary policy decision, which affects borrowing costs across the eurozone trading bloc, later this week.

The Bank also forecast that the economy will begin to shrink in the last quarter of the year – between October and December – and continue contracting until the end of 2023. Inflation in the eurozone soared to a record high of 9.1% in the year to August 2022, as Europe’s cost-of-living crisis deepens, Andrew Michael writes. Following the news, the pound fell 1% against the dollar – to a low of $1.1578 – reversing gains over the last few days which saw sterling pull away from a near-40 year low. The fall was precipitated by comments made by the Chancellor of the Exchequer, Kwasi Kwarteng, who hinted that more tax cuts were to come in the wake of last week’s seismic ‘fiscal event’ that was a Budget in everything but name. The rally came as the Office for National Statistics (ONS) revealed that the UK economy grew by 0.2% in the second quarter of this year, compared with a previous estimate of a 0.1% fall. With that support ending at the end of this week, the BoE said it is primed to increase the size of its daily gilt purchases up to £10 billion a day throughout this week.

The new cap takes effect from 1 October, when the prepayment tariffs cap will rise by £153 to £1,309. The latest figures mean inflation is now at its highest rate since March 2012 on the back of higher prices for transport, restaurants and hotels. The UK inflation rate jumped sharply last month, according to the latest figures from the Office of National Statistics (ONS). September’s inflation figure of 3.1% will be used to determine next year’s rise in the state pension. The cap is based on trailing average prices in wholesale energy markets – with the relevant period for the next adjustment in April falling between August 2021 and February 2022. The inflation figure has been on a sharp upward trajectory in the latter part of 2021 – October’s figure came in at 4.2% – and is now at its highest level since September 2011.

The Committee, who voted seven to two in favour of today’s rise, has been pushing up rates in an attempt to bring down inflation, which has remained stubbornly high and in double digits for the past seven months. On a monthly basis, the rate as measured by the Consumer Price Index (CPI) rose by 1.2% in April 2023, compared with 2.5% recorded in the same month last https://traderoom.info/ year. Unlike the UK, where inflation remains stubbornly high at 8.7%, the rate of price increases in the US has slowed markedly from the 40-year high of 9.1% reached last summer. The most recent figure for May from the Office for National Statistics for the headline rate is 8.7%, down from 10.1% in April, although core inflation increased from 6.2% to 6.8%.

The figure was down marginally from the 7.9% registered for the three months to July this year, but remains one of the highest rates since comparable records began in 2001. The ONS said ‘core’ CPI, which strips out volatile data relating to energy and food, dipped to 6.1% in the year to September, from a figure of 6.2% recorded in August. However, this was offset in the main figure by increases in petrol and diesel at the pumps.

July: Pressure Ramps Up On Bank Of England To Tackle Rising Prices

An estimated 1.4 million borrowers with variable rate and tracker mortgages will see their costs increase from the next payment. According to trade body UK finance, variable rate borrowers with an average mortgage balance of £220,000 will face a monthly rise of £15, while those with trackers will pay £24 more. Despite today’s increase, analysts doubt whether it will be enough to convince the US Federal Reserve to raise the cost of borrowing when the Federal Open Market Committee reveals its next interest rate decision on 20 September. An increase, announced today by the US Bureau of Labor Statistics, had been expected after energy costs soared following a decision by exporters, including Saudi Arabia and Russia, to cut supply in a bid to prop up oil prices. Investment professionals said the next consideration is how long borrowing costs will remain at record levels. Explaining its decision, the tenth time in a row it has increased rates, the ECB warned that inflation was “expected to remain too high for too long”.

A real return is obtained when the interest being paid out from a savings account or bond is greater than the prevailing inflation figure, which at the moment is 4%. “While the Fed remains steadfastly data dependent, the dollar’s course as well remains focused on inflation and the Fed’s monetary response,” Krosby says. Also, investors sitting on the sidelines and waiting for a better time to buy stocks can currently earn an interest rate of 4% or higher on the dollar in top high-yield savings accounts. These accounts are essentially risk-free for balances of up to $250,000 per bank, as long as the bank is insured by the Federal Deposit Insurance Corporation (FDIC). The dollar started to cool in the final quarter of 2022 as the Federal Reserve hammered rising inflation with interest rate increases. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.