- EUR/USD holds in negative territory following US CPI induced side below 1.1500.
- US CPI was the biggest year-on-year rise since November 1990.
The dollar jumped on the CPI data, with the euro hitting a 16-month low against the greenback. The dollar index, DXY, which measures the US dollar versus a basket of six currencies, rose 0.914% to 94.886. Consequently, the euro fell 0.97% vs the greenback at $1.1476. At the time of writing, EUR/USD is trading at 1.1478 and steady in a slow start to the new trading day.
US CPI way above Fed's target
US CPI rose 0.9% on a monthly basis after rising 0.4% in September as the largest gain in four months boosted the annual increase to 6.2%. It was the biggest year-on-year rise since November 1990 and followed a 5.4% leap in September. Economists polled by Reuters had forecast the overall CPI to rise 0.6%.
''The rise in cyclical components of inflation, like rents, will extend further in coming months, so core inflation can be expected to rise further,'' analysts at ANZ Bank argued. ''The October CPI data implies that if US inflation miraculously falls back to 0.2% MoM from November and maintains that rate of increase for 12 months, CPI inflation will still average 3.2% YoY in Q3 next year – way above the Fed’s target.''
For the day ahead, Australia’s October labour force survey is due but US bond markets will be closed for Veterans Day. Equities, however, will be open.
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Breaking: EUR/USD breaks 1.1500 like a knife through butter