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US Stocks rose as the Market viewed Inflation to be nearing its peak


US stocks advanced higher on Monday, preserving their bullish momentum and rose four straight days ahead of the key US consumer-price data. The speculations that inflation is near peaking have provided support to the equity markets, as the US CPI data is expected to show headline CPI cooled in August to an 8% a year pace. The falling US dollar also acted as a tailwind for the stock markets despite the firm anticipation that the Federal Reserve will hike interest rates by 75 basis points at its Sept. 20-21 meeting. The upside strength witnessed in equity markets could be linked to the market’s optimism and likely preparations for today’s inflation numbers.

In the Eurozone, the hawkish comments from the European Central Bank (ECB) policymakers and updates that Ukraine is gaining success in pushing back the Russian military from some of its areas have both underpinned the market’s cautious optimism. For today, the final readings of Germany’s August month Harmonized Index of Consumer Prices (HICP) will be crucial for immediate direction.

The benchmarks, S&P 500 and Dow Jones Industrial Average both preserved their bullish strength on Monday as the S&P 500 extended last week’s rally and notched the biggest gain over a four-day span since June. The S&P 500 was up 1.1% on a daily basis and the Dow Jones Industrial Average also advanced with a 0.7% gain for the day. All eleven sectors in S&P 500 stayed in positive territory as the Energy and the Information Technology sectors are the best performing among all groups, rising 1.81% and 1.63%, respectively. The Nasdaq 100 climbed the most with a 1.2% gain on Monday, and the MSCI World index was up 1.3% for the day.

Main Pairs Movement

The US dollar remained under pressure on Monday, extending its previous slide and fell to the lowest level in more than two weeks below the 108 mark amid the risk-on market environment. The news that Ukrainian forces have made significant progress in pushing back Russian troops has favoured investors’ sentiment and exerted bearish pressure on the safe-haven greenback. However, the losses could be limited as the policymakers from the US Federal Reserve and the European Central Bank (ECB) remain hawkish.

GBP/USD climbed higher on Monday with a 0.45% gain as the cable witnessed fresh buying and touched a daily high near the 1.1710 level amid the broad-based US dollar weakness. On the UK front, the recession worries were further fueled by the mostly disappointing UK macro data released earlier this Monday. Meanwhile, EUR/USD also edged higher and touched a daily high above the 1.018 mark in the early European session. The pair was up almost 0.20% for the day.

Gold preserved its upside strength with a 0.44% gain for the day after touching a daily high around the $1,734 mark during the US session, as the falling US dollar underpinned the safe-haven metal’s recovery. Meanwhile, WTI Oil extended its previous rally and refreshed its daily top near the $89 mark during the US trading session amid mixed concerns over the supply and demand of the black gold.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
GBPAverage Earnings Index + Bonus (Jul)14:005.4%
GBPClaimant Count Change (Aug)14:00-13.2K
EURGerman ZEW Economic Sentiment (Sep)17:00-60
USDCore CPI (Aug)20:300.3%
USDCPI (Aug)20:308.1%