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Dogecoin and Elon Musk Make the Headlines again, PPI Climbs to 10-year High & IMF Urges BoE to Take Action vs Inflation

Gold slips $33, as U.S. PPI climbs to 10-year high

Gold prices were down on Tuesday, as data released in the United States showed that producer prices were up by their most in the last decade.

Figures released by the Labor Department confirmed that its producer price index rose by 0.8% in November, and 9.6% from the same period last year.

The increase from last year was the largest gain in producer prices since 2010, when markets were recovering from the mortgage-led economic recession.

U.S PPI Fluctuation in 2021

 In addition to this, the jump from October to November was the biggest climb since July and was above market expectations for a 0.5% increase.

XAUUSD fell to an intraday low of $1,766, after hitting a high of $1,789 earlier in the session. The benchmark S&P 500 was also down 1.27% as of writing.

FTSE 100 lower, as IMF urge BOE to shift policy

London’s FTSE 100 was also lower on Tuesday, as the IMF urged the Bank of England to take action in order to combat rising inflation.

The Bank of England is set to meet this coming Thursday, for the last time this year, with pressure on the MPC to raise rates.

This pressure has come as inflation has almost doubled the bank’s 2% target, with economic growth also beginning to slow, due to the emergence of Omicron.

💡 Words from an expert
Hugh Gimber, global market strategist at JPMorgan Asset Management, said Tuesday’s labor market report would likely have been enough to convince the MPC to hike rates on Thursday, had it not been for the omicron variant.

He also stated: “The unemployment rate is grinding lower, while record demand for workers continues to put upward pressure on wages. Add in inflation data that is expected to hit a 10-year high tomorrow, and it is evident that interest rates at 0.1% are no longer appropriate for the UK economy.”

In a report on the British economy, the IMF stated that, “It would be important to avoid inaction bias, in view of the costs associated with containing second-round impacts. Careful communication would be needed to lay the groundwork with markets for potentially more frequent policy moves”.

Many still expect the BOE to still hold firm however, after opting to keep rates unchanged in November.

The FTSE 100 closed 0.18% lower on the news.

Dogecoin price up 20%, on Elon Musk tweets

 Dogecoin was up by over 20% in Tuesday’s session, as the so-called “meme-coin” rallied on the back of tweets from Elon Musk.

This came as the Founder and CEO of Tesla today announced that the company will be accepting the coin for transactions of company “merch”.

In a tweet, Musk stated that, “Tesla will make some merch buyable with Doge & see how it goes”.

💡 The Musk effect on Doge
We’ve already covered the well-known ‘Musk effect’ on the markets. It seems as Elon is back at it causing price fluctuations with just 95 characters on Twitter.

Dogecoin, which was one of the first meme coins, was initially started as a joke, and now has a market cap of over  $25,216,545.

Many now wait to see if today’s surge will be sustained, or if prices could slip, one the sentiment of today’s rally wears off.

“I know where I’m getting out before I get in.”

– Bruce Kovner

Eliman Dambell

Senior Market Analyst

 

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