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Euro and AUD as a hedge against USD Inflation.

The most recent Consumer Price Index data from CAD, USD and GBP indicate very high levels of inflation in relation to last year. Keeping in mind that a lower percentage change and lower deviation from the estimation is better in this context, the following are the YoY CPI data + the estimations:

USD: 5.4% (Est: 5.3%)
CAD: 3.7% (Est: 3.4%)
GBP: 3.8% (Est: 3.6%)

Now here is the Eurozone and AUD

EUR: 0.7% (Est: 0.7%)
AUD: 0.5% (Est: 0.5%)

Not only is the inflation rate far lower, but the estimations are accurate, meaning all the CPI were expected and indicative of stability. Last week when the US CPI data listed above was released, it caused a sharp rise in EUR/USD as the USD value keeps getting lower.

As of now, the USD is inflating at a rate comparable to 2008, which explains the record high cost of living and booming house prices. To add to this, the US government is spending like crazy and not making up for it in taxes, meaning they’re spending money they don’t have (printing money). It was just yesterday that an extra US$500m was authorised for Afghan refugee relocation funding, and the recent house infrastructure and public service spending has been through the roof, causing the US debt to vertically flatline. There is no such spending in the Eurozone or Australia. Could these (especially the Euro) be potential hedges against the USD within the next few years if spending continues at the same rate?

https://www.ig.com/en-ch/news-and-trade-ideas/dollar-weakness-lifts-eur-usd-and-gbp-usd–while-stifling-usd-jp-210812

https://www.marketwatch.com/story/consumer-inflation-posts-biggest-increase-since-2008-cpi-shows-11626180086

https://twitter.com/dlineminutes/status/1425535383668940801?s=21

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10 Comments

  1. Bad news for you: Euro zone inflation is exploding. Wood up to 300 percent more expensive. Middle double digits for steel and other goods.

    The EZB, European Zentral Bank, is since the greece near default buying up treasuries and printing money to the tune of low 4 digit billion. Per year. With no sign of stopping.

    Just saying. Careful if you think the Euro is not also inflated by the influx of 3XXX billion…..without collateral.

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