The US Dollar rallies as October CPI data of 0.4% and hawkish Fed rhetoric push markets to fully price in a December 9 rate hike, leaving the Euro to retreat toward its 1.1110 year-to-date lows.
The pair extends losses for a second day, trading at 1.1155 after retreating from highs above 1.1250. Hotter US CPI (0.4% vs 0.3% expected) plus hawkish Fed speakers have markets fully pricing a December 9 rate hike, boosting the Dollar, while German HICP confirmed easing inflation at 2.8% YoY, leaving the Euro without support.
The Dollar is outperforming most peers on October CPI of 0.4% MoM (vs 0.3% expected) and core at 0.3%, with Fed speakers Paulson and Logan calling for further tightening. Markets are fully pricing a December 9 hike with a 12% chance of 50bp, boosting the Dollar across the board.
Final German HICP confirmed easing price pressures in October at 2.8% YoY and -0.1% MoM, matching consensus and giving the Euro no bullish boost. Combined with a rate-hiking Fed and a stronger Dollar, the Euro extends losses for a second consecutive day.
The Euro extends its decline for a second consecutive day against the US Dollar, trading at 1.1155. The move follows a hotter-than-expected US CPI print of 0.4% for October and hawkish commentary from Fed officials, which have solidified market expectations for a rate hike at the December 9 meeting. Meanwhile, German HICP data confirmed a 2.8% year-on-year inflation rate, offering no support to the single currency.
Hotter-than-expected US CPI (0.4% MoM in October vs 0.3% expected) and hawkish Fed comments have markets fully pricing a December 9 rate hike, strengthening the Dollar, while German inflation confirmed at 2.8% YoY offers the Euro no support.
The article notes the pair is trading at 1.1155 but still above its year-to-date lows around the 1.1110 area, within the previous range.
The hotter-than-expected October CPI print (0.4% MoM vs 0.3% expected) and hawkish Fed speakers, which have practically confirmed a rate hike at the December 9 meeting.
Markets are practically fully pricing a hike at the December 9 meeting, with a 12% chance of a larger 50-basis-point increase.
The final German HICP confirmed easing price pressures at 2.8% YoY and -0.1% MoM in October, but it matched consensus, so it failed to provide the Euro any support rather than triggering a fresh sell-off.