Dollar advances toward cycle highs, US equities at records again
19 November 2021
The greenback quickly erased yesterday's dip and was seen higher against all of its major counterparts, pushing the dollar index toward the 96 level.
Earlier in the session, data showed that German PPI inflation rocketed to 18.4% year-over-year, up from 14.2% previously. Moreover, the monthly change rose to 3.8% from 2.3% in September. Thus, inflation continues to increase everywhere, yet the ECB will not raise rates in 2022.
Additionally, the French unemployment rate worsened to 8.1% from 8.0% previously, against expectations of improvement to 7.8%.
The euro slid after these data, sending the EURUSD pair toward the 1.13 level.
In the UK, retail sales rebounded more strongly than expected in October, by 0.8%, further reinforcing the view that the Bank of England will hike rates at its December meeting. Nevertheless, the GBPUSD pair declined, undermined by the broad USD strength.
US equities continued in their winning streak as Nasdaq and SP500 indices jumped to new record highs. Today marks the quarterly expiration day for options and derivatives, possibly causing elevated volatility. However, the season of Christmas begins, usually prompting a leg higher in equities.
Oil seems to be unable to return above the important 80 USD threshold. If oil closes below 78.30 USD, the multiple top pattern at 85 USD could become valid, potentially sending the black gold toward 72 USD.