- Euro bounces off 0.9930 and rises to 1.0180 on US CPI data.
- Cold inflation figures boost hopes for a “dovish pivot” from the Fed.
- The dollar crashes and stock markets soar.
ANDL EUR rallied from session lows around 0.9930 to 2-month highs at 1.0180 as the release of US inflation numbers sent the dollar tumbling across the board.
US inflation disappoints expectations
Consumer inflation rose 0.4% in October, unchanged from the previous month, against market expectations of 0.6%. The year-on-year figure slowed to a rate of 7.7%, above the 8% consensus, after rising 8.2% in September.
The core CPI, which excludes the impact of food and energy price volatility and is closely watched by the Federal Reserve to assess trend inflation, fell to 0.3% in October from 0.6%. September, versus expectations of a 0.5% increase. In year-on-year terms, the core CPI has fallen to 6.3% from 6.6% in September.
These figures suggest that inflation may have started to moderate and provide some room for the Federal Reserve to moderate its path of rate hikes in the coming months.
Since the market is extremely sensitive to all news that could determine the December monetary policy decision, these readings have pushed the dollar and Treasury yields lower, and the equity markets have risen strongly.
Technical levels to watch
Source: Fx Street
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