Inflation spooks markets, dollar stabilizes, cryptos pressured, Fed officials eyed

The market mood has soured as investors focus on inflation fears rather than signs of cooling down. The dollar is off the lows ahead of the US JOLTs figures and speeches from Fed officials. Cryptocurrencies are on the back foot.

China reported an increase of 6.8% in the annual Producer Price Index (PPI), higher than expected. Rises in commodity prices have been attributed to the leap, the highest since October 2017. On the other hand, the Consumer Price Index (CPI) remained tame due to increases in pork prices recorded in 2020.

Concerns of rising inflation have been spooking markets, weighing especially on US tech stocks. These fears replaced the calm following the downbeat Nonfarm Payrolls figures, which showed the US economy is not overheating. Tensions around mounting ahead of April’s CPI figures due out on Wednesday.

The risk-off mood helped the dollar stabilize, with EUR/USD hovering around 1.2150, GBP/USD above 1.41, and AUD/USD above 0.78. The greenback lost substantial ground on Monday. The US releases its JOLTs job openings report for March later in the day, potentially showing a leap in vacancies.

The German ZEW Economic Sentiment is projected to show an increase in business confidence as Europe advances with its vaccination campaign. UK Prime Minister Boris Johnson announced additional loosening of measures from Monday.

Federal Reserve officials, including John Williams, Lael Brainard, Mary Daly and Raphael Bostic are set to speak later in the day. They will likely repeat the bank’s message that inflation is temporary.

Pipeline: Gasoline supplies to the US East Coast are still strained due to a ransomware attack on Colonial Pipeline. The firm is working to resume normal activity by the end of the week, recovering from a more potentially originating from Russia.

Virus: The US Food & Drug Administration (FDA) approved the use of the Pfizer/BioNTech vaccine to adolescents aged 12 to 15. Reaching children would help in achieving herd immunity.

Cryptocurrencies have been consolidating their losses after correcting lower from their highs on Monday. Bitcoin is changing hands at around $55,000, Ethereum is below $4,000, XRP under $1.50 while Dogecoin stands out by moving higher.

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