Dollar holds above two-month trough ahead of US retail sales
The dollar gained ground in European trade against a basket of major rivals, holding above recent two-month lows after marking the worst daily loss in a year following weak US inflation data for October.
Such data hurt the chances of another 0.25% interest rate hike in December, with investors now awaiting crucial US producer prices and retail sales data later today.
The Index
The dollar index rose 0.25% to 104.31, with a session-low at 104.05, after closing down 1.5% on Tuesday, the third loss in a row, and the largest in 2023, marking a two-month trough at 103.99.
US Inflation Data
In the US, consumer prices rose 3.2% y/y in October, slowing down from 3.7% in the previous reading, and below estimates of 3.3%.
Core prices, excluding food and energy, rose 4% y/y, down from 4.1% in the previous reading.
US Rates
Following the data, the odds for a US interest rate hike in December plunged to 1%.
Traders also now expect the Federal Reserve to enact its first interest rate cut in May 2024.
Fresh Data
Now investors await important US retail sales and producer prices data for October later today to gauge the likely path ahead for US policies.
US producer prices are expected down 0.3% m/m in October, while core prices are expected down 0.1% m/m.
On a yearly basis, producer prices are expected up 1.9% in October, slowing down from 2.2% in the previous reading.
US 10-year treasury yields sharpen losses to two-month trough after inflation data
US 10-year treasury yields declined on Wednesday for the third straight session to a two-month trough following US inflation data for October.
The report indicated that inflationary pressures have receded in the US, and bolstered the view that the current policy tightening cycle is already over.
US Yields
US 10-year treasury yields tumbled 0.5% today, plumbing two-month lows at 4.428% and boosting non-yielding assets.
Such gains came after US consumer prices showed a sharp slowdown in October, all but confirming the end of the current policy tightening cycle.
US Inflation Data
In the US, consumer prices rose 3.2% y/y in October, slowing down from 3.7% in the previous reading, and below estimates of 3.3%.
Core prices, excluding food and energy, rose 4% y/y, down from 4.1% in the previous reading.
US Rates
Following the data, the odds for a US interest rate hike in December plunged to 1%.
Traders also now expect the Federal Reserve to enact its first interest rate cut in May 2024.
Analysis
Analysts now expect the Fed to change gear and focus on supporting the economy as inflation slows down considerably in line with targets.
Gold extends gains to one-week high as US yields lose ground
Gold prices rose in European trade on Wednesday against a basket of major rivals, hitting one-week high as the dollar loses ground.
Recent weak US inflation data hurt chances of another US interest rate hike in October.
Gold Prices Today
Gold prices rose 0.5% to $1,972 an ounce, the highest in a week, after rising 0.9% on Tuesday, the largest such profit since November 2.
The Dollar
The dollar index is trading near two-month low at 103.99 against a basket of major rivals, with analysts expecting even more losses to come, in turn boosting gold prices.
US Yields
US 10-year treasury yields tumbled 0.5% today, plumbing two-month lows at 4.428% and boosting non-yielding assets.
Such gains came after US consumer prices showed a sharp slowdown in October, all but confirming the end of the current policy tightening cycle.
US Inflation Data
In the US, consumer prices rose 3.2% y/y in October, slowing down from 3.7% in the previous reading, and below estimates of 3.3%.
Core prices, excluding food and energy, rose 4% y/y, down from 4.1% in the previous reading.
US Rates
Following the data, the odds for a US interest rate hike in December plunged to 1%.
Fresh Data
Now investors await important US retail sales and producer prices data for October later today to gauge the likely path ahead for US policies.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat yesterday at 870.45 tonnes, the highest since October 3.
Gold gains ground as dollar tumbles following inflation data
Gold prices rose on Tuesday as the dollar lost ground against most major rivals following US inflation data.
In the US, consumer prices rose 3.2% y/y in October, slowing down from 3.7% in the previous reading, and below estimates of 3.3%.
Core prices, excluding food and energy, rose 4% y/y, down from 4.1% in the previous reading.
Such data all but guarantees the Federal Reserve will hold interest rates flat, and that the current cycle of policy tightening is likely over.
Otherwise, the dollar index fell 1.5% as of 21:04 GMT to 104.06, with a session-high at 105.7, and a low at 103.9.
Gold spot prices rose 0.9% as of 21:05 GMT, or $17 to $1967.20 an ounce.