Top Story

Dollar extends but CPI miss not a game changer

Today’s release of US inflation figures have been far from impressive, underscoring Donald Trump’s concerns over the Federal Reserve’s projected rate hikes. The dollar, which was already on the way down against European and commodity currencies after Trump yesterday said the Fed was making a "mistake" and described the path of rate hikes as being "crazy," weakened further in the immediate aftermath of the data release. The weakness in the dollar – combined with relatively lower and yields – helped to underpin gold, which hit a high so far of around $1210.

According to the US Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 0.1% both on the headline and core fronts in September, missing estimates of +0.2% respectively. On a year-over-year basis, headline CPI was 2.3% vs. 2.4% expected, down from 2.7% the previous month, while core CPI was unchanged at 2.2% but below 2.3% expected.

However, the CPI miss is not a game changer by any means, despite the immediate negative dollar reaction. It is only one month’s worth of data and unless it forms a trend the Fed is unlikely to change its interest rate projections. Also, the central bank will aim to maintain its credibility by being independent, so Trump’s criticism is also unlikely to make much of a difference in terms of future rate hikes. So, don’t be surprised to see the dollar resume its bullish trend in the not-so-distant future, possibly a lot sooner than may appear at the moment.


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.