UK data and US inflation in focus

On Monday, the dollar index rose, showing the latest US job reports did not alter market expectations that the Fed would begin asset tapering as soon as November 2021. Still, concerns over tapering by the Fed, US-China relations, surging energy prices, and the upcoming earnings season weighed on sentiment and dented risk appetite.

US Dollar hits 3-year high versus Yen

As the US dollar rebounds amid a gloomy mood, USDJPY hits near three-year highs record around 113, and the EURUSD struggles to extend the correction toward 1.1600. There will likely be light trading, focusing on Tuesday's JOLT report, Wednesday's US inflation figure and FOMC minutes.

A bottleneck in supply-chain distribution is driving crude oil prices higher.

After testing the low of $61.68 on August 23, WTI has been continuously up trending, reaching the 7-year peak above 80 dollars per barrel on Monday morning session. We can expect a more extended period of high inflation in the euro area due to the sharp rise in gas and electricity prices in Europe. If gas and electricity prices remain the same during the winter, it will add about 1% to euro inflation, eroding consumers' purchasing power. Furthermore, oil prices have gone up faster than expected. As Asian trading hours kick off on the first day of the week, WTI prices do not appear to be slowing down.

As European traders braced for Monday's opening bell, the yellow metal suspended Friday's downward move on Monday.

The gold price jumped higher after the disappointing US Nonfarm Payrolls report. However, re-examining the overall jobs data and catalysts might strengthen the US dollar favouring gold bears.

Events of the week

IMF and World Bank officials will discuss global economic conditions, the COVID-19 pandemic and taxation issues in their annual meetings beginning Monday.

UK economic data releases are set to grab the spotlight as rising inflation, supply chain disruptions, and staff shortages threaten the UK economy. The September claimant count change is published on Tuesday, along with August unemployment and wage data. A release of August's GDP and manufacturing data will take place on Wednesday.

US consumer price inflation data for September is the key economic report to watch this week. The consumer price index is expected to increase 0.3% monthly in September and 5.3% annually.

Inflation data for producers are due on Thursday, followed by retail sales data on Friday. While retail sales are projected to be pulled down because of an abrupt drop in vehicle sales amid supply chain disruptions, non-vehicle sales figures are seen to increase.