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The basic inflation in the United States carries a steady at 2.8 % in December as expected

Inflation in the United States increased, as it was measured by a change in the PSE expenses (PCE), to 2.6 % year on an annual basis in December from 2.4 % in November. .

The PCE price index, which excludes flying food and energy prices, increased by 2.8 % in the same period, matching November reading and market expectations. The basic PCE price index increased by 0.2 % on a monthly basis.

The market reaction to inflation data in the United States of America

The US dollar index rose slightly up after this data and the last time was seen at 0.07 % a day at 108.25.

US dollar price this week

The table below shows the percentage of change in the US dollar (USD) against the main currencies listed this week. The US dollar was the strongest against the Australian dollar.

US dollar euro GBP JPY CAD Aud Nzd Chf
US dollar 1.09 % 0.53 % -0.46 % 0.80 % 1.51 % 1.06 % 0.56 %
euro -1.09 % -0.48 % -1.40 % -0.15 % 0.43 % 0.09 % -0.41 %
GBP -53 % 0.48 % -1.23 % 0.33 % 0.90 % 0.59 % 0.07 %
JPY 0.46 % 1.40 % 1.23 % 1.31 % 2.17 % 1.77 % 1.18 %
CAD -0.80 % 0.15 % -0.33 % -1.31 % 0.52 % 0.26 % -26 %
Aud -1.51 % -0.43 % -0.90 % -2.17 % -52 % -0.29 % -0.79 %
Nzd -1.06 % -0.09 % -59 % -1.77 % -26 % 0.29 % -0.73 %
Chf -56 % 0.41 % -07 % -18 % 0.26 % 0.79 % 0.73 %

The heat map shows the percentage changes in the main currencies against each other. The basic currency is chosen from the left column, while the quotation currency is chosen from the top row. For example, if you choose the US dollar from the left column and move along the horizontal line to the Japanese yen, the percentage offered in the box will represent the USD (base)/JPY (quote).

Common questions about inflation

Inflation measures an increase in the price of a representative basket for goods and services. The main inflation is usually expressed as a change in percentage on a month on a monthly (illiterate) basis on an annual (annual) basis. Basic inflation excludes more volatile elements such as food and fuel that can fluctuate due to geopolitical and seasonal factors. The basic inflation is the number that economists focus on and is the level targeted by central banks, which are assigned to maintaining inflation at a controlled level, and is usually about 2 %.

Consumer price index (CPI) measures changing commodity and services basket prices over a period of time. It is usually expressed as changing a percentage on a month basis on a monthly (illiterate) basis and on an annual basis (YOY). Core CPI is the number targeted by central banks as it excludes food and flying fuel inputs. When the basic consumer price index rises above 2 %, it usually leads to high interest rates and vice versa when less than 2 % is less than 2 %. Since high interest rates are positive for the currency, high inflation usually leads to a stronger currency. The opposite is true when the inflation falls.

Although it may seem intuitive, high inflation in a country pays the value of its currency and vice versa to reduce inflation. This is because the central bank usually raises interest rates to combat higher inflation, which attracts more global capital flows from investors looking for a profitable place to enter their money.

Previously, gold was the assets that converted investors into high times of inflation because they have maintained their value, and while investors are often buying gold for their safe properties in times of turmoil in the extremist market, this is not the case most of the time. This is because when inflation is high, central banks will put interest rates to combat them. The highest interest rates are negative for gold because it increases the costs of maintaining gold in assets that bear interest or placing money in the calculation of cash deposits. On the other hand, low inflation tends to be positive for gold because it leads to low interest rates, making the bright metal a more applicable investment alternative.

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