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Dollar Slides, CPI Data Suggests US Fed Could Slow Pace Of Interest Rate hikes

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Dollar Slides, CPI Data Suggests US Fed Could Slow Pace Of Interest Rate hikes

(CTN News) – After U.S. consumer prices increased less than anticipated in October, suggesting that underlying inflation is cooling, the dollar plunged on Thursday. Wall Street applauded the report because it may enable the Federal Reserve to be less aggressive with interest rate rises.

The information strengthened other currencies vs the dollar. The British pound saw its largest daily gain since 1985, while the Japanese yen at one point surged to its best single-day gain since 2008.

For the first time in eight months, headline inflation’s annualized growth rate fell below 8%. The benchmark 10-year note’s yield fell as the U.S. Treasury market surged, setting the stage for its biggest daily loss since March 2009.

The Nasdaq rose more than 7% as equity markets rocketed. However, Cleveland Fed President Loretta Mester said it was too soon to declare victory and that the primary threat to inflation was that the U.S. central bank would not raise interest rates high enough.

Art Hogan, a chief market strategist at B. Riley Wealth in New York, said the markets benefited from lower inflation than anticipated.

According to Hogan, “every line of the report demonstrates progressive improvement.” He said that the fact that inflation is “obviously heading in the correct direction” prevents the Fed from being more hawkish.

According to the Labor Department, the consumer price index increased by 0.4% in October to equal the gain from the previous month. The CPI was expected to increase by 0.6%, according to economists surveyed by Reuters.

After rising by 0.6% in September, the CPI grew by 0.3% month over a month when volatile food and energy components were excluded.

According to Lee Hardman, a currency analyst at MUFG in London, “The CPI report has strengthened the sell-off trend in the dollar.”

Over 16% growth in the dollar this year has contributed to Thursday’s fall. Analysts disputed the claims that the Bank of Japan interfered after the yen surged higher against the dollar.

“I believe this represents the data. I doubt this is part of a planned intervention, “said Bipan Rai, head of FX strategy for North America at CIBC Capital Markets.

George Goncalves, head of U.S. macro strategy at MUFG Securities Americas, said that the reduction in Treasury rates was to blame for the collapse in the dollar’s value.

According to Goncalves, “everything is responding to the huge decreases in rates we’re witnessing.” “The dollar has been strong throughout this era. People nowadays are changing their minds, “he added, in their perception of the market.

Fed funds futures accounted for a decline in estimates for the peak target rate of the US central bank, which dropped below 5%. The Fed’s probability of raising interest rates by 50 basis points in January instead of 75 basis points in December increased to 71.5%.

According to Mester of the Cleveland Fed, tighter monetary policy was required to bring inflation on a stable downward trajectory toward the 2% objective set by the US central bank.

As significant gains from the previous year were not included in the index’s computation, annual inflation decreased. CPI increased by 7.7% annually in October compared to the preceding month, down from 8.2%, as headline inflation dropped below 8% for the first time since February.

According to Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities, the unexpected decline in the headline and core CPI proves that the economy has passed its peak inflation.

Rate increases in 2023 are in question, according to LaVorgna, even if the Fed is still on schedule to raise rates by 50 basis points in December. This is because history demonstrates that the rate at which inflation drops always reflects its earlier advances upward.

The yen gained 3.94% against the dollar to 140.92, while the euro increased 1.93% to $1.0204. Sterling increased 3.15% on the day to $1.1714.

Analysts said that the crypto-world crisis hurt the market mood. On Wednesday, the Binance exchange backed out of a rescue arrangement for competitor FTX. With his firm on the verge of failure, FTX Chief Executive Sam Bankman-Fried is now scurrying to examine all possibilities.

After falling to less than $16,000 for the first time since late 2020 in the previous session, Bitcoin gained 11.76% to $17,744.00 today. This year, it has decreased by more than 60%.

FTX’s native token, FTT, gained 153% on the day to reach $3.826; nonetheless, it has lost nearly 85% of its value this month.

 

Description

 

 

RIC

 

 

Last

 

 

U.S. Close
Previous
Session

 

 

Pct Change

 

 

YTD Pct
Change

 

 

High Bid

 

 

Low Bid

 

 

 

 

 

 

107.8700

 

 

110.3400

 

 

-2.23%

 

 

12.760%

 

 

+110.9900

 

 

+107.7100

 

 

Euro/Dollar

 

 

 

 

$1.0206

 

 

$1.0013

 

 

+1.93%

 

 

-10.23%

 

 

+$1.0222

 

 

+$0.9936

 

 

 

 

 

 

140.9350

 

 

146.3650

 

 

-3.71%

 

 

+22.42%

 

 

+146.5850

 

 

+140.2000

 

 

Euro/Yen

 

 

 

 

143.83

 

 

146.56

 

 

-1.86%

 

 

+10.37%

 

 

+146.7400

 

 

+143.2200

 

 

Dollar/Swiss

 

 

 

 

0.9637

 

 

0.9843

 

 

-2.09%

 

 

+5.65%

 

 

+0.9899

 

 

+0.9631

 

 

Sterling/Dollar

 

 

 

 

$1.1713

 

 

$1.1360

 

 

+3.21%

 

 

-13.30%

 

 

+$1.1732

 

 

+$1.1358

 

 

Dollar/Canadian

 

 

 

 

1.3318

 

 

1.3526

 

 

-1.51%

 

 

+5.37%

 

 

+1.3570

 

 

+1.3309

 

 

Aussie/Dollar

 

 

 

 

$0.6620

 

 

$0.6431

 

 

+2.94%

 

 

-8.93%

 

 

+$0.6631

 

 

+$0.6388

 

 

Euro/Swiss

 

 

 

 

0.9834

 

 

0.9854

 

 

-0.20%

 

 

-5.15%

 

 

+0.9895

 

 

+0.9821

 

 

Euro/Sterling

 

 

 

 

0.8710

 

 

0.8812

 

 

-1.16%

 

 

+3.69%

 

 

+0.8819

 

 

+0.8701

 

 

NZ Dollar/Dollar

 

 

 

 

$0.6027

 

 

$0.5884

 

 

+2.46%

 

 

-11.93%

 

 

+$0.6040

 

 

+$0.5841

 

 

Dollar/Norway

 

 

 

 

10.0790

 

 

10.3965

 

 

-3.03%

 

 

+14.43%

 

 

+10.4610

 

 

+10.0810

 

 

Euro/Norway

 

 

 

 

10.2910

 

 

10.3981

 

 

-1.03%

 

 

+2.78%

 

 

+10.4271

 

 

+10.2856

 

 

Dollar/Sweden

 

 

 

 

10.5803

 

 

10.8804

 

 

-0.93%

 

 

+17.33%

 

 

+10.9527

 

 

+10.5692

 

 

Euro/Sweden

 

 

 

 

10.7984

 

 

10.8995

 

 

-0.93%

 

 

+5.52%

 

 

+10.9285

 

 

+10.7990

 

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