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France Inflation ex-tobacco (MoM) climbed from previous 0.6% to 0.7% in August
Confirmed
In Short: France's inflation excluding tobacco rose from 0.6% to 0.7% in August, according to reports. This increase comes amidst a broader economic backdrop where U.S. diesel prices hit a record high, surpassing the previous peak set in June 2022.
The U.S. diesel price surge, now averaging $5.82 a gallon, is driven by rising crude oil costs and refining bottlenecks, according to a fuel price monitoring service. This record high is expected to spread through the economy, contributing to inflation and potentially affecting the outcome of the upcoming midterm elections.
In the currency markets, AUD/USD remains below 0.7150, close to an over three-week low, as US bond yields hold near multi-year highs. The mixed Chinese activity data for August also failed to inspire the Australian dollar.
Economic projections suggest no need for a series of hikes, with the Federal Reserve under pressure to clarify its reaction function under new leadership. The focus remains on inflation, which has been above target for five and a half years, despite the economy being at full employment.
The UK inflation backdrop is reinforcing expectations of tighter monetary policy, as GBP/USD rose to 1.3552 on Thursday, reaching its highest level since 29 August.
What's confirmed
- AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day.
- US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair.
- Mixed Chinese activity data for August also fail to inspire the Aussie.
What's still developing
- Gold struggles to capitalize on its modest Asian session uptick, and remains close to a one-month low, which it touched the previous day.
- Bitcoin holds steady around $78,000 on Tuesday, sustaining its roughly 2% recovery from the previous day.
- Diesel now costs an average of $5.82 a gallon, according to the pricing service GasBuddy, breaking the previous record high of $5.81 set under former President Joe Biden in June 2022 when fuel costs skyrocketed amid Russia’s invasion of Ukraine and the post-Covid global economy.
- And diesel is considering the backbone of the economy, driving up the cost of groceries, manufactured goods, inflation and more.
- A POLITICO Poll conducted in August found that 61 percent of individuals surveyed believe the Iran war has made things more expensive for their families, up 4 percent from a month earlier.
- The new record is likely to spread through the economy and feed inflation that could damage Republican prospects of keeping control of Congress in November’s midterm elections.
- August’s jobs report came in hotter than anyone forecast in Bloomberg’s survey of economists and the August CPI report showed headline inflation remains above target at 3.4% while core CPI rose 0.29% month-on-month, nearly double the 0.17% trend rate needed to bring annual inflation down to the 2% target.
- Previously, it was that the Fed would hold unless the data justified a hike.