US INFLATION DATA SPIKES TO A 30-YEAR HIGH

US stocks declined slightly on Wednesday as investors reflected on high inflation data. Numbers from the statistics agency showed that the headline consumer price index (CPI) rose by 6.2% in October as energy prices rose and supply chain challenges remained. This was the biggest increase since 1991. Core CPI, which excludes volatile food and energy products, rose to 4.6% in October. Therefore, these numbers mean that the Federal Reserve could move to tighten its interest rates policy in the next few months. It also means that Biden’s administration will not get the new social spending it has proposed. The Dow Jones and Nasdaq 100 indices fell by about 0.15%.

Gold and cryptocurrency prices surged as investors moved to the so-called safe havens. Gold jumped to the highest level in months. Bitcoin and Ethereum also surged to fresh all-time highs of $69,000 and $4,900, respectively. In total, the market capitalization of all cryptocurrencies jumped to more than $2.9 trillion. In the past few months, investors have moved some of their assets into cryptocurrencies as they anticipate higher inflation. Cryptocurrencies also rallied after Apple’s Tim Cook revealed that he owned cryptos. As such, there is a possibility that the company will invest in Bitcoin as well.

The British pound retreated slightly after the latest US inflation data. Focus now shifts to upcoming UK GDP numbers that will come out in the morning session. Analysts expect that the economy slowed down substantially in the third quarter. They expect that the economy recovered by about 2%, which was lower than the previous growth of more than 5%. Still, the UK is expected to have the fastest recovery pace in the G7. The ONS will also publish the latest manufacturing and industrial production data.

XAUUSD

The XAUUSD pair jumped sharply after strong inflation data. The pair rose to a multi-month high of 1,868. On the daily chart, the pair managed to move above the important resistance at 1,835. It also moved above the 25-day and 50-day moving averages and above the 38.2% Fibonacci retracement level. Therefore, the pair will likely keep rising since it currently has momentum.

EURUSD

The EURUSD pair declined below a key support level after the inflation data. It moved to a low of 1.1508, which was the lowest level since June 2020. On the daily chart, the pair moved below the standard pivot point. It also moved below the 25-day and 50-day moving averages while the MACD has dropped below the neutral level. Therefore, the pair will likely keep falling in the near term.

ETHUSD

The ETHUSD bounced back after strong CPI data. The pair rose to an all-time high of 4,900. On the four-hour chart, it is slightly below the upper side of the ascending channel. The pair has also moved above the 25-day and 50-day moving averages. The momentum and Relative Strength Index indicators have been rising. Therefore, the pair will likely maintain bullish momentum going forward.