- The kiwi bounces away from 0.5840 and rises to 0.6000.
- US inflation data disappointed expectations and has dented the dollar.
- Stock markets rally on hopes the Fed will ease in coming months.
The dollar soared after the release of cooler than expected US inflation figures. The pair, which has been trading lower during the Asian and European sessions, rebounded from 0.5840 to hit session highs just above 0.6000.
Dollar falls as US inflation cools
US inflation was unchanged at 0.4%, versus market expectations for a 0.6% reading, while year-on-year consumer prices fell to a 7.7% rate, well above the 8% consensus , after a reading of 8.2% in September.
Core CPI, the Fed’s preferred gauge for assessing inflationary pressures, which excludes volatile food and energy prices, has eased to 0.3% in October from 0.6% in September, while the market had expected a smoother decline to 0.5%. In year-on-year terms, the core CPI has fallen to 6.3% from 6.6% in September.
These figures add to the evidence that inflation may have peaked, easing pressure on the Federal Reserve to maintain its aggressive monetary tightening cycle and boosting expectations of a softer rate hike in December.
The dollar and US Treasuries have fallen sharply. The Dollar Index, which has appreciated more than 16% so far this year, boosted by the aggressive stance of the Fed, has lost about 2.2% after the data. Likewise, the benchmark 10-year US Treasury yield has lost 30 basis points, currently at 3.83%.
On the other hand, US stock markets have surged on the data, with the Dow Jones up 2.5%, the S&P500 appreciating 4% and the Nasdaq 5.42% above opening levels.
Technical levels to watch
|last price today||0.6004|
|daily change today||0.0124|
|Today’s daily variation in %||2.11|
|Daily opening today||0.588|
|Previous daily high||0.5971|
|Previous Daily Low||0.5873|
|Previous Weekly High||0.5944|
|Previous Weekly Low||0.5741|
|Previous Monthly High||0.5874|
|Previous Monthly Low||0.5512|
|Daily Fibonacci of 38.2%||0.591|
|Daily Fibonacci of 61.8%||0.5934|
|Daily Pivot Point S1||0.5845|
|Daily Pivot Point S2||0.581|
|Daily Pivot Point S3||0.5747|
|Daily Pivot Point R1||0.5943|
|Daily Pivot Point R2||0.6006|
|Daily Pivot Point R3||0.6042|
Source: Fx Street