🚀US CPI Inflation Softens to 3.2% in October, Below Forecast
In a recent report by the US Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) for October showed a year-on-year decline to 3.2%, below the expected 3.3% and September's 3.7%. The Core CPI, excluding volatile items like food and energy, rose 4%, slightly below the forecasted 4.1%. On a monthly basis, CPI remained unchanged, while Core CPI increased by 0.2%
The BLS noted that the rise in shelter costs ofset a decline in the gasoline index, resulting in a stable seasonally adjustd index The energy index fell by 2.5%, primarily due to a 5% drop in the gasoline
Market Reaction
The immediate market reaction saw the US Dollar Index down 0.65% at 105.00 and the 10-year US Treasury bond yield down nearly 3% at around 4.5%
Analyst Commentary FXStreet Analyst Yohay Elm commented that a "soft-landing scenario" is favorable for stocks, benefiting from lower rates and healthy consumer demand. However, the data is adverse for the US Dollar, as expectations for lower borrowing costs weigh on it.
Federal Reserve and Rate Outlook Despite the softening inflation, Federal Reserve officials, including Chairman Jerome Powell, have maintained a data-dependent approach to monetary policy. The Fed is expected to leave the interest rate unchanged, with markets pricing in an over 80% probability of no change at the December meeting.
Next CPI Data Expectations
A monthly core inflation reading of 0.5% or higher could boost the USD, while a weak increase of 0.2% or less may confirm no change in Fed policy weighing on the currency. Analyst Yohay Elam suggested that a significant upside surprise would be needed for markets to reassess the Fed's outlook
In the EUR/USD outlook, technical analysis indicates a potential decline if the pair closes below 1.0650, with resistance at 1.0750 and 1.0800 signaling an uptrend. The Consumer Price Index for October was released at 13:30 GMT, influencing market positioning on the Fed's rate outlook and impacting the USD's valuation. #cpi #dydx #Flow #BTC #binanacesquare
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