Home Forex Strongly bullish on muted DXY, oil dips near $85.00

Strongly bullish on muted DXY, oil dips near $85.00

by SuperiorInvest
  • Asian indices advance on weak DXY performance ahead of US CPI.
  • Chinese stocks channeled their buying spree on expectations of a dovish stance by the PBOC.
  • Black gold faces heat on lower consensus on oil demand.

Markets in the Asian domain are showing a rock-solid performance following the performance on Wall Street on Friday. Asian indices were infused with fresh blood as the US Dollar Index (DXY) posted a muted performance in the Asian session. DXY oscillates in a narrow range of 108.58-108.85 after a below-average open as investors await the release of the U.S. Consumer Price Index (CPI).

At press time, Japan’s Nikkei225 jumped 1.06%, the ChinaA50 soared 1.68%, the Hang Seng was up 2.69% and the Nifty50 was up 0.64%.

The DXY underperforms ahead of US inflation, which will be released on Tuesday. US headline CPI is lower at 8.1% from 8.5% previously. With US gasoline prices down significantly and interest rates continuing to rise, price pressures are expected to cool further.

On Monday, Chinese stocks carried over their bullish stance from Friday on a drop in Chinese inflation data. Economic data came in at 2.5%, below expectations and previous releases of 2.8% and 2.7% on an annual basis. Falling inflation in China will force the People’s Bank of China (PBOC) to sound dovish and cut the key interest rate (PLR) further. And more liquidity the influx into the economy will throw up volumes of economic activity.

On the oil front, oil prices fell as oil demand in China is expected to fall for the first time in two decades. Curb closures to prevent the spread of Covid-19 have restricted the movement of men, materials and machinery. Therefore, the upcoming holiday week and households staying at home will keep oil demand on tenterhooks.

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