EUR/USD trades at 1.1220 as the US Dollar strengthens on Fed Governor Waller's warning of a potential 50bp December rate hike, pending today's 13:30 GMT October CPI data.
Fed Governor Waller explicitly raised the risk of a half-point December rate hike if October core CPI comes in at 0.3% or higher, lifting the Dollar and pushing the pair down to 1.1220. Hawkish Fed rhetoric re-prices rate differentials against the Euro, though the outcome now hinges on the October CPI release due today at 13:30 GMT, which Deutsche Bank economists expect softer at 0.2%.
Waller's hawkish speech, scoring 9/10 versus a 7.3 historical average, raised odds of a half-point December hike, and the FXS Fed Sentiment Index rose 3.17 points to 145.50, well above the neutral 100 line. This pushed the Dollar Index from early losses to marginally positive above 101.70. Today's CPI release is the immediate risk: consensus of 0.2% is below the 0.3% trigger Waller cited.
The EUR/USD pair retreated to 1.1220 as the US Dollar gained momentum following hawkish comments from Fed Governor Christopher Waller. Waller indicated that a 50 basis point rate hike could be necessary in December if October core CPI reaches 0.3% or higher. Markets are now focused on the upcoming 13:30 GMT CPI release, where economists anticipate a softer 0.2% print.
The Euro gave up early gains after Fed Governor Waller said a half-point rate hike may be needed in December if October core CPI inflation comes in around 0.3% or higher, which strengthened the US Dollar.
A softer-than-expected October CPI print at 13:30 GMT (consensus 0.2% versus 0.3% previously) could reduce tightening fears, and hawkish ECB commentary from Philip Lane supports the Euro on rate-differential grounds.
Fed Governor Waller warned that a half-point December rate hike may be needed if October core CPI comes in around 0.3% or higher, and market sentiment indicators shifted sharply hawkish, lifting the Dollar above 101.70.
The October CPI release at 13:30 GMT; economists expect headline and core at +0.2% month-on-month, and a softer figure would weaken the case for aggressive tightening.