We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • Heads Up:🇬🇧 GBP Unit Labor Costs (YoY) (2Q) due at 09:30 GMT (15min), Actual: N/A Expected: N/A Previous: 2.1% https://www.dailyfx.com/economic-calendar#2019-11-20
  • RT @mynamejd: SP500 earnings revisions up & down per sector - Source Refinitiv https://t.co/bvmlQCltkN
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.87%, while traders in US 500 are at opposite extremes with 79.99%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/06877Dk0Iz
  • Heads Up:🇪🇺 EUR ECB Publishes Financial Stability Review due at 09:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2019-11-20
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Gold: 0.37% Silver: 0.22% Oil - US Crude: -0.49% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Nl2cW4qqNE
  • US Dollar Selloff May Accelerate After #FOMC Minutes Released - https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2019/11/20/US-Dollar-Selloff-May-Accelerate-After-FOMC-Minutes-Released.html
  • Copper Price Trend May Reverse on FOMC Minutes - https://www.dailyfx.com/forex/fundamental/article/special_report/2019/11/20/Copper-Price-Trend-May-Reverse-on-FOMC-Minutes.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #copper #fomc
  • Forex Update: As of 08:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.13% 🇨🇭CHF: -0.00% 🇪🇺EUR: -0.13% 🇨🇦CAD: -0.21% 🇳🇿NZD: -0.22% 🇦🇺AUD: -0.24% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6ztmAWF3DV
  • $EURGBP broke through a congestive range it has been stuck in since around mid-October. What are the implications for the pair’s downside breakout and where is it heading? Get your market update from @ZabelinDimitri here:https://t.co/hHaGgulbQD https://t.co/CPQtpgNWUh
  • Indices Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.26% US 500: -0.27% France 40: -0.37% Germany 30: -0.46% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/w3yUQukPaf
US Dollar Gains Ground as January CPI Beats, Government Shutdown Avoided?

US Dollar Gains Ground as January CPI Beats, Government Shutdown Avoided?

2019-02-13 14:28:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Talking Points:

- Headline January US CPI beats expectations at +1.6% y/y, as did the core CPI reading at +2.2% y/y; the headline inflation was unchanged month-over-month.

- Disinflation in headline inflation may continue: the US Dollar is near its yearly high and energy prices have traded sideways in recent weeks.

- The US Dollar rallied following the release, following on with earlier news that US President Donald Trump will sign a new budget to avoid a government shutdown at the end of the week.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

We’re getting through the halfway mark for the week and the first batch of significant US economic data due out in recent days is helping underpin a recovery in the US Dollar. Headline January US CPI beat expectations narrowly, coming in at +1.6.2% from +2.5% previously (y/y). With average hourly earnings in at +3.2% y/y, real wage growth continues to trend positive in the United States for the sixth consecutive month. The annualized core inflation came in at +2.2% y/y as expected.

The inflation data arrive at a time when the fundamental winds appear to be shifting around the US Dollar. After weeks of negative attention in between December and January – fears over the US government shutdown, the US-China trade war, the collapse in energy prices, and the resultant slowing of the economy – newsflow around the greenback is starting to become more positive at the margins. On the inflation front, for example, even if disinflation persists, that price pressures aren’t receding as fast as previously expected may be seen as a positive development in policymakers’ eyes.

Also helping provide a lift to the US Dollar this morning was news that US President Trump would be moving forward to sign the budgetary agreement reached between Congressional Democrats and Republicans. Lifting the uncertainty of another shutdown and limiting the collateral damage to the economy helps remove a big obstacle for the Federal Reserve in 2019.

Following the news and data, rates markets have started to move marginally higher, suggesting that a floor may have formed in expectations. Prior to today, Fed funds futures were pricing in a 7% chance of a 25-bps rate hike and an 11% chance of a 25-bps rate cut by December 2019; those odds have flipped to 11% and 7%, respectively.

Here are the data driving the US Dollar this morning:

- USD Consumer Price Index (JAN): 1.6% versus 1.5% expected, from 1.9% (y/y).

- USD CPI ex Food & Energy (JAN): 2.2% versus 2.1% expected, from 2.2% (y/y).

See the DailyFX Economic Calendar for Wednesday, February 13, 2019.

DXY Index Price Chart: 1-minute Timeframe (February 13, 2019) (Chart 1)

US Dollar Gains Ground as January CPI Beats, Government Shutdown Avoided?

Following the inflation report, the US Dollar (via the DXY Index) continued its intraday uptrend, piggybacking on the news that a US government shutdown would be avoided. The DXY Index initially rallied from 96.81 to as high as 97.03 following the release, but was trading back higher at 96.96 at the time this report was written.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.