In this update, we will sum up and review the top economic events that impacted the market over the past week. Our focus will be on previously released data, the expectations of economists and future prospects.
Top News that Impacted the Market
On Wednesday, November 10, the US Labor Department reported that prices rose about 6.2% in October, compared to one year ago, which was the fastest pace since 1990. On a monthly basis, the CPI increased by 0.9% in October, after rising by 0.4% in September. This unexpected rise in the US CPI resulted in an increase of more than 1% in the US dollar, against a basket of six major currencies, which pushed the DXY from a low of 93.97 all the way up to 94.90.
The reason behind the higher inflation figures was associated with bottlenecks in the supply chains and shortages of both raw materials and workers. This, in turn, drove prices up for US businesses, resulting in the increased input costs being passed over to the American consumers. It is also believed that the surge in US CPI was led by energy prices, which jumped by 4.8% from the previous month, and by 30% over a year. In October, oil prices were about 12.3% higher, which translates to an increase of 59.1% in the past year.
The escalating prices could cause the Federal Reserve to tighten their policy more quickly than it has been signaling. The central bank has indicated that, in the coming weeks, it will begin reducing the number of bond purchases every month. However, the bank is keeping interest rate hikes off the table for now.
If you are interested in learning about major economic events to focus on this week, Check out the Weekly Outlook, Nov. 15 – 19, 2021.
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UK Gross Domestic Product
On Thursday, November 11, the data from the Office for National Statistics was released. It reflected an expansion in national output by 1.3% in the third quarter, which resulted in a figure 2.1% below the pre-crisis level in the fourth quarter of 2019. In the second quarter of 2021, the UK GDP showed a level of growth of 5.5%. This was a period during which restrictions on activities were lifted and the reopening of economies resulted in the higher level of growth.
A significant slowdown in the economic recovery in the UK during the third quarter of 2021 could be attributed to staff shortages, supply constraints and higher fuel prices for the country. Furthermore, the rising infection rates in the UK, coupled with global supply shortages, also played an important role in slowing down economic recovery. The release of this data prompted a sudden decline in the British pound, which dragged the GBP/USD pair to its lowest level since mid-December 2020.
For a cryptocurrency overview, check out our Weekly Cryptocurrency Update, Nov 6-12, 2021
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$1 Trillion Infrastructure Bill
On Wednesday, the White House announced that, on Monday, President Joe Biden will sign off the largest federal investment in infrastructure in more than a decade. The legislation includes about $550 billion…
Read More: Forex Economic Calendar Review: Top 5 Reports Impacting the Market