empty
07.01.2022 10:43 AM
Inflation reduction in Europe and good US employment data will support the demand for risky assets

The recent events show that investors have completely switched from the "Omicron" topic to the Fed's promise at the end of the December meeting, particularly the expected three-time increase in interest rates this year.

World markets were under pressure for the second day after the end of the Christmas rally. As mentioned in the previous market review, the mood in the market is fully influenced by increased expectations that the Fed may start raising borrowing costs as early as March as well as the publication of new US inflation data.

Today, the market's attention will be focused on the publication of consumer inflation figures in the euro area. In our opinion, this may become an important signal of whether the inflation values in economically developed countries, which used measures to stimulate the economy and help the population during the coronavirus pandemic, have reached their peak. If the actual presented EU data turns out to be at least no higher than the forecast of 4.7% against 4.9% a year earlier and show a greater decline, then this may become a signal that inflation in the US may also reach a maximum, and then, as business and logistics activity normalizes, it may adjust if it does not noticeably decline.

If such prospects await us, then the Fed's first rate hike in March should not be expected. In this case, the yield on US government bonds will most likely turn down. The US dollar will also be under pressure, and the demand for assets, such as commodities traded in dollars, will noticeably grow. Moreover, a rally in the stock markets should be expected.

Besides the inflation data in the euro area, the employment data in the US will undoubtedly attract attention. According to the forecast, the US economy should have received 400,000 new jobs in December against the growth of 210,000 in November. At the same time, the unemployment rate is expected to decrease from 4.2% to 4.1%. If the numbers do not disappoint, then we can expect the traditional local strengthening of the US dollar in the currency market and an increase in demand for company shares, not only in the States but also in Europe.

Assessing the current situation, we believe that there is every chance for a positive mood in the markets today.

Forecast for the day:

The EUR/USD pair is still in the range of 1.1230-1.1360. If the EU's consumer inflation data decline, this may support the pair, which will most likely rise to the level of 1.1410.

This image is no longer relevant

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

AUD/JPY. Analysis and Forecast

The AUD/JPY pair is regaining positive momentum after a modest pullback the previous day. However, spot prices remain confined within a multi-day range due to mixed fundamental signals, trading near

Irina Yanina 14:39 2025-06-20 UTC+2

USD/CHF: The Pair Struggles to Gain Momentum Amid Conflicting Forces

At present, USD/CHF shows no clear intraday direction and fluctuates within a narrow range just above the 0.8155 level, reflecting market uncertainty during the European session. The Swiss franc

Irina Yanina 14:36 2025-06-20 UTC+2

The Euro Will Retain Its Strength and Investor Interest

During her speech, IMF Managing Director Kristalina Georgieva stated that she sees the potential for the euro to play a broader role globally.Her remarks came amid growing geopolitical instability

Jakub Novak 11:25 2025-06-20 UTC+2

Euro Slightly Rises After Lagarde's Speech

The euro saw a modest recovery after European Central Bank President Christine Lagarde stated that expanding trade within the region could help offset losses resulting from global fragmentation. Her optimistic

Jakub Novak 11:10 2025-06-20 UTC+2

Donald Trump – A Mastermind of Geopolitical Uncertainty (A Potential Correction in Oil and Gold Prices)

Six months into Donald Trump's presidency, it seems he has already thoroughly exhausted the world with his "brilliant" initiatives, groundbreaking actions aimed at making America great again, and his vivid

Pati Gani 09:49 2025-06-20 UTC+2

The Market Tries to Extinguish the Fire

Markets are digesting Donald Trump's announcement that a decision on U.S. strikes against Iran will be made within two weeks. The White House could have acted at any moment

Marek Petkovich 09:01 2025-06-20 UTC+2

What to Pay Attention to on June 20? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Friday. The only report of the day will be the UK retail sales report. No economic data will be released today

Paolo Greco 07:45 2025-06-20 UTC+2

GBP/USD Overview – June 20: The Bank of England Didn't Surprise

The GBP/USD currency pair traded relatively calmly on Thursday, given the fundamental backdrop available to the market. On Wednesday evening, the Federal Reserve announced the results of its latest meeting

Paolo Greco 07:16 2025-06-20 UTC+2

EUR/USD Overview – June 20: Summing Up the Fed Meeting

The EUR/USD currency pair traded relatively calmly on Wednesday and Thursday. Recall that the results of the latest 2025 Federal Reserve meeting were announced on Wednesday evening, but we didn't

Paolo Greco 07:16 2025-06-20 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen is showing weakness against the stronger U.S. dollar, with the USD/JPY pair reaching a new monthly high. This rise in the dollar against the yen is mainly

Irina Yanina 20:12 2025-06-19 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.