Indices rise on earnings optimism, Commodity Currencies hit new Records

On Wednesday, rising optimism about the earnings season led to continued stock market indices, and rising risk-taking sentiment put pressure on the dollar. But scaling uncertainty over inflation expectations has contributed to sharp fluctuations in bond yields.

Earlier in the session, European inflation came in at market expectations with YoY growth of 3.4% and monthly growth of 0.5%, causing the euro to bottom out at a support level of 1.16200 after retreating from the 1.650 top.

Although slowed UK inflation data has pushed buyers back on the pound, expectations of the BoE raising interest rates next month remained strong. Because in addition to the hawkish signals from Mr Bailey to hike interest rates, the increase in energy prices seems to continue to impact inflation as food prices keep rising in October.

The consumer price index for September was 3.1%, lower than the forecast of 3.2%. But polls suggest markets are still expecting the Bank of England to be the first major central bank to decide on raising interest rates at its next meeting on November 4.

The International Monetary Fund (IMF) revised down Asia's projected economic growth due to the continuing Covid-19 waves, supply chain damage, and inflation pressures.

The International Monetary Fund has cut its projected economic growth for Asia from 7.6% to 6.5%. The bank also forecasts that China's economy will grow by 8% in 2021 and 5.6% next year. Still, Coronavirus outbreaks and contractionary monetary policies will hinder sustainable consumption growth. Rising commodity prices fuel the growth of advanced Asian economies such as New Zealand, Australia, South Korea and Taiwan, strengthening their national currencies.

As coal and other raw materials prices continued to rise, the Australian dollar hit a new record high of 0.75 against the US dollar on Wednesday.

The New Zealand dollar is also on the verge of crossing the four-month highs, with buyers looking at 0.718. A fragile economic recovery and the likelihood of central bank tapering may limit the gains in the short term.

Events of the day

Investors are waiting for the Canada inflation data to be released at 15:30.

Another important economic data for today is the US Oil inventories Report, which the US Energy Information Administration will release at 17:30.