The US Dollar while writing is flat ahead of the crucial US inflation data for October. The Polish Zloty is the only pair making a substantial profit against the Greenback, which had a volatile ride overnight after rating agency Moody’s issued a negative outlook for the AAA rating of the US.
The Consumer Price Index in the US is forecast to rise 3.3% YoY in October which is down from 3.7% in September. The number was just released at 8.30am and declined to 3.2% on a yearly basis in October, 3.3% was expected. Inflation was flat in October from the previous month. Stock futures are up 300 points on the back of this better than forecast inflation print. Major currency pairs jumped on the back of the data, eur/usd popping to the high side. The 10 year treasury yield has tumbled lower as well.
Although Federal Reserve officials remain committed to the data-dependent approach to monetary policy, the Federal Reserve is widely expected to leave the interest rate unchanged at the 5.25%-5.5% range this year. Fed chairman Jerome Powell stated last week “we are making decisions meeting by meeting based on the totality of the incoming data and their implications for the outlook for economic activity and inflation.” This positive CPI number should help the cause.
EUR/USD is up on the day and in positive territory. Data from the eurozone came in showing that GDP expanded at an annual rate of 0.1% in Q3 which matched estimates. Views from the ECB point to a prolonged pause in rates giving support to a stronger euro.
USD/CAD is grinding higher and extending some modest gains. Stronger crude oil prices are not giving CAD enough push to really make a move. Slow growth and a softer tone in commodities will continue to weigh on the Loonie.
GBP/USD is higher on the day helped by data from the UK. Employment and wage data came in stronger than expected, 4.2% and 7.9% respectively. The wage inflation of 7.9% is down from 8.2%.
USD/BRL is tracking most of its EM peers in which the real is a bit stronger against the USD. With the holiday in Brazil on Wednesday the pair is quiet with all eyes waiting to see the US CPI print.
USD/MXN is following suit this morning as the peso is up 0.3% in line with overall emerging markets. The pair has been in some tight trading ranges but tends to see heavier flows due to MXN higher interest rates and liquid markets.