The US Dollar Index reached a four-week high of 102.52 as markets reprice Fed expectations toward a potential 50 bps hike in December following a 0.4% MoM headline CPI print.
October CPI beat expectations (0.4% MoM headline vs 0.3% expected; 0.3% core vs 0.2%), and Waller's comments have markets partially pricing a 50bp Fed hike on 9 December. The DXY rose 0.3% to 102.52, a near four-week high, and holds above its 20-day EMA at 101.91 with an RSI near 59. MUFG's scepticism of a jumbo hike and one more payrolls report before the FOMC are counterweights.
The dollar gained 0.27% against the euro on Wednesday as markets repriced Fed expectations toward a possible 50bp hike on 9 December after the hot October CPI (0.4% MoM headline, 0.3% core). A hawkish Fed repricing weighs on EUR/USD, though the move so far is modest and MUFG doubts a jumbo hike is the base case.
The US Dollar Index climbed 0.3% to 102.52 on Wednesday, reaching its highest level in nearly four weeks. The rally follows hotter-than-expected October CPI data and comments from Fed official Waller, which have led markets to partially price in a 50 basis point interest rate hike for the 9 December FOMC meeting.
The October CPI came in hotter than expected (0.4% MoM headline vs 0.3% estimated) and Fed official Waller suggested a strong print may warrant a 50bp hike, leading markets to partially price a bigger rate hike on 9 December.
The article notes MUFG still expects a 25bp hike rather than 50bps, and another payrolls report is due before the December FOMC, so rate expectations could dial back if that report disappoints.
A larger expected Fed rate hike raises US yields and dollar attractiveness, so EUR/USD fell about 0.27% as markets began pricing a possible 50bp hike on 9 December.