US core inflation rises to 1.9% y/y – USD recovers

Mostly better than expected figures  from the US: annual core inflation rose to 1.9%, better than expected.Also jobless claims beat with a drop to 255K, the lowest since 1973. Some good news for a change.

The US dollar is advancing across the board, with EUR/USD slipping below  1.14.

More data

• CPI remained flat year over year, better than a drop of 0.1% expected.
• CPI  m/m  dropped 0.2% as expected.
• Core CPI m/m rose 0.2%, better than +.1% expected.
• Jobless claims dropped to 255K, from a downwards revised 262K and much better than 270K expected.
• Continuing claims dropped to 2.158 million, slightly better than expected.
• The NY Fed Manufacturing Index improved but only to -11.36, worse than -8 points predicted. This is the only disappointment.

All in all, good data boosts the  greenback.

Currency Reaction

• EUR/USD  dips below 1.14, extending the Nowotny losses.
• GBP/USD slips to 1.5440.
• USD/JPY rises back to 118.50.
• USD/CAD jumps above 1.29 to 1.2920.
• AUD/USD falls to the round number of 0.73. Earlier it defied weak jobs data.
• NZD/USD is down from the highs to 0.6833.

The US was expected to report an annual core inflation level of 1.8% for September, exactly like in August.  This is the figure that matters most to the Federal Reserve.  Month over month, the expectations was for +0.1%. Headline CPI carried expectations for -0.2% m/m and +0.1%. Weekly jobless claims were predicted to rise to 270K from 263K beforehand. The New York Fed Manufacturing Index was expected to improve from -14.67 to -8 points.

The dollar was generally lower towards the publication, still suffering  from the big miss on retail sales. The exception was the euro.

EUR/USD lost the line it fought so hard to break, 1.1460, after ECB member Nowotny hinted at more QE.  The pair traded around 1.1440 just before the release.

GBP/USD was around 1.5475, USD/JPY at 118.20, USD/CAD at 1.2885 and AUD/USD at 0.7325.

Later today we have the Philly Fed Manufacturing Index. The final inflation figures from Europe are expected tomorrow.

More:  How To Trade This EUR Resilience? – Credit Agricole