USD Tumbles 150 Pips Lower After A Soft Inflation Report for October
The inflation report which has just been released is the highlight of the week and it has moved markets as anticipated, sending the USD down after some softer CPI figures for October. Markets are feeling positive again as the US CPI came in lower than predicted today, with the headline CPI YoY at 3.2% and core CPI at 4.0%.
The market has priced in further hikes by the FED, while now the odds of further rate hikes have diminished, with traders expecting a soft landing for the US economy. Nasdaq is currently only 6% away from its all-time high.
EUR/USD has risen substantially, trading at 1.0860s, pushing above moving averages on the daily chart. The 100 and 200-day moving averages stand around 1.08 and traders pushed through them without much difficulty. USD/JPY has fallen below its 100-hour moving average of 150.70s.
But it has stopped right at the 200-hour moving average now which is standing at 150.7o. GOLD also surged around $30 higher on the numbers, but has stopped right at the 20 daily SMA where we decided to open a sell Gold signal. Below is the inflation report for October.
US October 2023 Consumer Price Index Report
- October core CPI YoY +4.0% versus +4.1% expected
- CPI YoY +3.2% versus 3.3% expected
- September headline CPI YoY was 3.7%
- CPI MoM for October +0.0% versus +0.1% expected
- Prior CPI MoM was +0.4%
Core measures:
- Core CPI MoM +0.2% versus +0.3% expected. Last month was 0.3%
- Core CPI YoY 4.0% versus 4.1% expected. Last month was 4.1%
- Shelter +0.3% versus +0.6% last month. Year on year % versus 7.2% last month
- Services less rent of shelter +0.3% m/m vs +0.6% prior
- Real weekly earnings % vs -0.2% prior
- Food +0.3% m/m vs +0.2% m/m prior
- Energy -2.5% m/m vs +1.5% m/m prior
- Rents +0.5% vs +0.5% prior
- Owner equivalent rent +0.4% vs +0.6% prior
After the report, the US dollar has turned bearish due to a constant theme of weakness in the inflation figures. The probability of a December hike has been totally eliminated, while the probability of a January rise has dropped from 33% to 7%. In fixed-income markets, US Treasury rates are around 20 basis points lower, with US 10-year yields trading at around 4.45%, down from 4.65% before the inflation report and critically below 4.50%. That has sent the USD 150 lower across the board.
EUR/USD Live Chart
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