News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • A rebound off confluence support has USD/CAD eyeing near-term downtrend resistance just higher. Get your $USDCAD market update from @MBForex here:https://t.co/fPTwHd65rl https://t.co/jUzX00FnKe
  • US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CAD https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/08/04/US-Dollar-Price-Action-Setups-EUR-USD-EURUSD-GBP-USD-GBPUSD-USD-CAD-USDCAD.html https://t.co/vRuwBes7bH
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.10% Gold: 0.03% Silver: -0.40% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/UeR1femBvZ
  • US Treasury Secretary Yellen: - We have seen significant price increases in recent months - Expects to see elevated inflation rates for some time - Inflation will recede in not too distant future and fall to levels in line with price stability by the end of the year $USD #Gold
  • @RichDvorakFX inverse H&S pattern in the context of the bull flag puts emphasis on bullish breakout potential...need >4430 for bullish confirmation imo
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 94.38%, while traders in France 40 are at opposite extremes with 78.27%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/x6BPnBF4lP
  • S&P 500 on the verge of breaking small consolidation pattern. Dow Jones looking for a new record high. Get your market update from @PaulRobinsonFX here:https://t.co/cbYD5oFkpb https://t.co/jjRuAK1fdb
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.00% France 40: 0.00% FTSE 100: -0.00% US 500: -0.29% Wall Street: -0.77% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/PXEHH2xMun
  • AUD/USD extends the advance following the Reserve Bank of Australia (RBA) interest rate decision to mark the first three-day rally since June. Get your market update from @DavidJSong here:https://t.co/ObJHENt4hS https://t.co/xblMeXF02N
  • USD/JPY on Pace to Print Bullish Engulfing Candlestick - #USDJPY chart https://t.co/8NWolvqA9S
US Dollar Snaps Intraday Losses after September US CPI Release

US Dollar Snaps Intraday Losses after September US CPI Release

Christopher Vecchio, CFA, Senior Strategist

Talking Points

- Headline September US CPI comes in at +2.3% y/y, while the core CPI reading was likewise below expectations at +2.2% y/y.

- The lowest inflation readings since February may help deflate the narrative around higher rates, which has been feeding into lower stock prices.

- The US Dollar initially dropped on the weaker than expected inflation figures, but soon stabilized as both US bonds and stocks were bid.

See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

Amid a sharp selloff in both bonds and stocks that has market participants practically screaming “Sell USA!” the US Dollar has found little reprieve. Absent meaningful economic data this week up until today, there has been no catalyst to spark a turnaround in the greenback’s fortunes. However, today’s inflation data may help calm some aspects that contributed to yesterday’s acute selling conditions.

Headline September US CPI missed expectations slightly, coming in at +2.3% versus +2.4% expected (y/y), according to a Bloomberg News survey. With average hourly earnings in at +2.8% y/y, real wage growth is once again trending positive in the United States for the second consecutive month. Similarly, core inflation came in at +2.2% y/y versus +2.3% y/y expected; collectively, these are the lowest inflation readings since February.

The data comes against the backdrop where US Treasury yields have been rising amid signs that the Federal Reserve will hike rates beyong what the market had priced in after the September FOMC meeting. Fed Chair Jerome Powell has said recently that the economy’s ‘neutral rate’ (the breakeven short-term rate that theoretically keeps an economy from overheating or underperforming – the Goldilocks level, if you will) may be higher than previously anticipated, helping spark the run higher in long-end US Treasury yields.

But with signs that inflation pressures are cooling rather than heating up, today’s data should help diffuse some of the concern that Fed Chair Powell’s mindset is to continue hiking rates come hell or high water. While a December rate hike still looks like a lock (76%), the first month with greater than 60% pricing thereafter is June 2019 (72%).

Here are the data driving the US Dollar this morning:

- USD Consumer Price Index (SEP): +2.3% versus +2.4% expected, from +2.7% (y/y).

- USD CPI ex Food & Energy (SEP): +2.2% versus +2.3% expected, from +2.2% (y/y).

See the DailyFX Economic Calendar for Thursday, October 11, 2018

DXY Index Price Chart: 1-minute Timeframe (October 11, 2018) (Chart 1)

US Dollar Snaps Intraday Losses after September US CPI Release

Following the inflation report, the US Dollar was able to halt its downtrend intraday, even if losses initially materialized after the inflation report was released. The DXY Index initially dropped from 95.17 to as low as 94.98 following the release, but was trading back higher at 95.21 at the time this report was written.

Read more: US Dollar Snaps Both Haven & Yield Bid, Slides with Bonds & Stocks

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

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

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

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

DISCLOSURES