The biggest jump in US inflation in 30 years stoked inflation fears and saw the dollar strengthen sharply. The rand was the biggest loser in the EM space, falling 2.6% on the day to close at R15.41. We are now approaching the previous high of R15.50, which should provide some support for the rand ahead of today’s MTBPS presentation.
Gold’s safe-haven status saw it close stronger at $1,849 while Platinum was higher and Palladium closed flat. This morning sees all three metals trading firmer at $1,853 for Gold, at $1,081, and Palladium at $2,038. The surge in the dollar and Biden’s commitment to lowering energy costs saw the price of Oil drop. Brent is currently trading at $82.87 and WTI at $81.58.
Bets that the Fed will have to hike interest rates sooner than expected as inflation continues to rise saw the dollar surge against all currencies yesterday. The euro fell nearly 1.0%, the pound was down 1.55%, and the Yen was 0.93% weaker. The DXY is up almost 1.0% at 94.85 this morning, with the dollar at 1.1480 against the euro and 1.3417 against the pound. US bond yields rose sharply across the curve in the wake of the CPI data. The 30Y-yield is at 1.93%, the 10y-yield is at 1.57%, and the 2y-yield is at 0.52%. Wall Street weakened as yields rose, with the S&P closing 0.82% down, the Dow 0.66% lower, and the Nasdaq lost 1.66%. US futures have opened marginally in the green this morning while Asian-Pacific stocks are positive. The local ALSI closed 0.44% up at 68.279 after a strong jump in the Resource sector.