Saturday, December 4

The dollar, protagonist in the escalation of inflation

The price of turkey, the quintessential food in the United States for Thanksgiving, reached all-time highs, a true reflection of escalating inflation. The consumer price index (CPI) reached its highest figure in the last 30 years in October, 6.2 percent.

“That there is a little inflation, around 4 percent, has always been said to be good. From 6 percent onwards, the situation gets complicated ”, explains Josep Codina, chief analyst at Inversión magazine.

However, the expert points out that this time, the dollar it is once again acting as a refuge for investors in times of inflationary uncertainty.

At yearly highs

The euro / dollar reached its annual highs for the greenback this week; minimums for the Community currency. It marked the 1.1450 to change.

Something directly related to the price of food like turkey. “Due to inflation, bonds fall in price, that makes people want to be in a position of a strong currency”, explains Josep Codina.

“The inflation that may have caused the rise of the turkey may also have made the dollar have strengthened,” says the expert.

Along with the dollar, the analyst points out that they normally have a negative correlation, which endorses the stationary pattern that the metal is going through.

Despite this, the price of an ounce, which stands at $ 1,865 now, would be looking to approach its annual highs at $ 1,880-1,890.

The positive reading of inflation

The increase in inflation above the forecasts of the consensus of analysts once again left fears in the stock markets.

Wall Street moved in the red in the following session after knowing the figure, while the IBEX 35 closed the week with losses of 0.5 percent. Falls that deepened in the final stretch of the week, flirting again with the 9,000 point level.

“The positive reading is that right now we only have one data, that of this month. Central banks think that the situation is transitory, and that the peak, if it has not already occurred, will come in the next three months ”, explains Codina.

The key, according to the analyst, will be to attend to the profitability of the stock markets and bonds if that peak does not finally occur.

With the data of University of Michigan investment confidence at ten-year lows, the alarms, for the moment, will not be necessary to connect them.

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