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US Dollar Looks to CPI Data for a Lifeline as Fed Rate Hike Bets Fade

US Dollar Looks to CPI Data for a Lifeline as Fed Rate Hike Bets Fade

Talking Points:

  • US Dollar Looking to CPI Data for a Lifeline as Fed Rate Hike Bets Fizzle
  • Commodity Dollars Drop, Yen Gains as Risk Appetite Firms in Asian Trade
  • See Economic Releases Directly on Your Charts with the DailyFX News App

A quiet economic calendar in Europe is likely to keep speculation about the trajectory of Fed policy in focus as the US CPI report comes across the wires. The core year-on-year growth rate is expected to print at 1.8 percent in September, unchanged from the prior month.

Fed funds futures show traders now envision liftoff in April 2016 having favored March only yesterday. The dovish shift came after US PPI figures showed core wholesale inflation unexpectedly slowed in September while the Fed Beige Book survey said prices remain “fairly stable” and wage growth is “mostly subdued”.

Fed officials seem reasonably content with progress on the labor market, putting tepid inflation in focus as the reason du jour for delaying normalization. With that in mind, it seems hardly surprising that signs of lackluster price growth weigh on priced-in tightening bets.

Another soft result on the CPI release may pressure the US Dollar further and boost risk appetite. Follow-through may be limited however considering the dovish shift in expectations that has already transpired over the past 24 hours. On the other hand, an upside surprise may catch investors wrong-footed, triggering a reversal of the greenback’s latest slump moves.

The sentiment-geared Australian, Canadian and New Zealand Dollars outperformed while the safety-linked Japanese Yen traded broadly lower as risk appetite firmed in overnight trade. The MSCI Asia Pacific regional benchmark equity index rose over 1 percent. Optimism likely reflected ebbing fears of an on-coming Fed interest rate hike following yesterday’s news-flow.


Asia Session

21:30NZDBusinessNZ Manufacturing PMI (SEP)55.4-55.1
00:00NZDANZ Consumer Confidence Index (OCT)114.9-110.8
00:00NZDANZ Consumer Confidence (MoM) (OCT)3.7%-0.9%
00:00AUDConsumer Inflation Expectation (OCT)3.5%-3.2%
00:30AUDNew Motor Vehicle Sales (MoM) (SEP)5.5%--1.7%
00:30AUDNew Motor Vehicle Sales (YoY) (SEP)7.7%-2.9%
00:30AUDEmployment Change (SEP)-5.1K9.6K18.1K
00:30AUDUnemployment Rate (SEP)6.2%6.2%6.2%
00:30AUDFull Time Employment Change (SEP)-13.9K-11.0K
00:30AUDPart Time Employment Change (SEP)8.9K-7.1K
00:30AUDParticipation Rate (SEP)64.9%65.0%65.0%
00:30AUDRBA FX Transactions Government (SEP)-785M--404M
00:30AUDRBA FX Transactions Market (SEP)712M-336M
00:30AUDRBA FX Transactions Other (SEP)89M-85M
04:00JPYTokyo Condominium Sales (YoY) (SEP)-27.2%-23.7%
04:30JPYIndustrial Production (MoM) (AUG F)-1.2%--0.5%
04:30JPYIndustrial Production (YoY) (AUG F)-0.4%-0.2%
04:30JPYCapacity Utilization (MoM) (AUG)-0.9%--0.2%
04:30JPYTertiary Industry Index (MoM) (AUG)0.1%0.0%0.0%

European Session

No Data

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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