Geoffrey Smith 

Investing.com — Dollar drops after the worst single-day decline in several months. However, the debate about inflation and interest rates continues. Philadelphia Fed President Patrick Harker said he is open to three more rate increases this year. Lael Brainard, the Senate’s vice-chair, will be present in the Senate. Delta Air Lines’ (NYSE:) results might shed some light on the effect of rising Covid-19 case numbers in the U.S. and another large car plant at one of China’s most important ports being shut down by you-know what. What you need to know about the financial markets for Thursday, 13 January.

1. After the greenback’s 2-month low, dollar sell-off slows down

After its largest daily decline in three months the dollar has stabilized. This is a signal that the global markets have priced in risks from tighter U.S. monetary policy for now.

After falling 0.6% Wednesday on Wednesday, the, which measures the greenback’s value against six advanced economies, had fallen 0.1% to 94.812 at 6:15 am ET (1115 GMT). This indicates that there are growing concerns about inflation reaching its peak. The annual inflation rate rose 7% in the past year according to figures released Wednesday. Analysts argued however that the current situation was worsened by a number of factors.

It is not likely that talk of tighter policies will stop. Philadelphia Federal Reserve President Patrick Harker told the Financial Times in an interview that he’s open to more than three interest rate hikes this year, while Lael Brainard’s prepared remarks for her vice-chair confirmation hearing later Thursday stressed the paramount need to bring inflation down.

2. PPI, jobless claims due

At 8:30 AM ET (when the U.S. publishes December’s producer price inflation), it will provide a more accurate measure of current inflation dynamics.

Overall prices are expected to have risen 0.4% in the month, which would be their smallest monthly increase in a year, while core prices are expected to have risen 0.5%, a more modest slowdown after December’s shock acceleration.

U.S. unemployment claims are also due to release at the time. These claimants will have been at near-post-pandemic levels last week, at around 200,000.

3. Stocks will open slightly higher. Delta earnings are in focus

The U.S. stock market is expected to open higher than usual later in the year, as risk appetite has been rekindled by recent developments on the monetary front.

Gains may also be limited by the awareness that sentiment shifts over interest rates have been driven by alarmingly high levels of Covid-19 in the U.S. during the past two weeks. This has raised the possibility of growth being hampered in the short term.  The earnings of Delta Air Lines, due to be published early next week, could shed more light on this.

The contract and contracts both were higher by an identical amount at 6:15 AM ET. They were also up 48 point, or 0.1%.  Benchmark, however, seemed to be in the final stages of their short-term recovery, moving up to 1.75%.

Other stocks in focus may include Robinhood (NASDAQ:), which downplayed an apparently false rumor about it preparing to list contracts in ‘meme coin’ Onu.

4. China’s port issues worsen, new record in hospital admissions

On Wednesday, U.S. hospital admissions hit a record high. This shows that Omicron’s stronger transmissibility is more than offset by the positives of its weaker variant.

Absenteeism continues to be a problem both in the U.S. which registered an average of over 780,000 cases per day over the past week, despite a dramatic drop on Wednesday. Further afield, France recorded over 360,00 new cases over the second consecutive day on Wednesday. France has relaxed travel restrictions with neighbouring Britain as it feels that economic harm is unnecessary when the community is so active.

Covid-related risk continues to be apparent in China where Volkswagen (DE) joined Toyota in closing the plant at Tianjin. Disruptions at the ports of Tianjin, Dalian and Ningbo are leading to increased congestion at Shanghai, the world’s busiest port.

5. As road sellers sell out, oil prices rise two months higher

Crude oil prices rose to the highest level in 2 months thanks to a lower dollar and signs that big consumer nations are losing space in their reserves.

According to Tanker Trackers’ Samir Madani, the latest U.S. Energy Department sale reduces the Strategic Petroleum Reserve’s holdings to less than 100 days of import cover. International agreements require the U.S. and other advanced economies to hold at least 90 days’ worth of imports.

Wednesday’s government data on U.S. inventories, however, showed another large build in gasoline inventories, suggesting that pressure on final demand for fuel is building as the Omicron wave rises.

Prices rose to $82.67 per barrel while they rose 0.1% at $84.78 per barrel.