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The Fed may have known what it was talking about and another day, another short-coming in US data: core inflation drops to a level of 2.2% y/y and headline inflation slips to 0.9%, both worse than expected. The silver lining comes from weekly jobless claims, that reach multi-year lows of 253K.

The US dollar is slipping on the news, erasing some gains seen earlier.

US core inflation was expected to remain unchanged at 2.3% while headline inflation carried expectations for a rise to a level of 1%. However, weaker PPI figures yesterday may have slightly dampened expectations. Yesterday’s retail sales report was quite mediocre.

The dollar was still looking good, albeit retreating from the higher levels it enjoyed earlier in the day.

Inflation and jobs data (updated)

  • Jobless claims: previous 267K, expected 270K, actual: 253K
  • CPI m/m: prev. -0.2%, exp. +0.2%, actual: +0.1%.
  • Core CPI m/m: prev. 0.3%, exp. +0.2%, actual: +0.1%.
  • Core CPI y/y: prev. 2.3%, exp. 2.3%, actual: +2.2%
  • CPI y/y: prev. 1%, exp. 1.1%, actual: +0.9%.

Currency reaction

The US dollar is lower across the board.

  • EUR/USD traded around 1.1265, up from the lows of 1.1235 but below  the range that characterized its trading beforehand. It ticks above 1.1270 in the aftermath.
  • GBP/USD was around 1.4140,  unchanged, like the BOE. Cable is only marginally higher.
  • USD/JPY  was around 109.25, holding above the round 109  resistance level turned support. The pair rises.
  • USD/CAD traded around 1.2833, awaiting more oil related headlines after the BOC showed optimism. The pair sldies.
  • AUD/USD held its head high above 0.77, enjoying the good Australian jobs report. The Aussie reached new cycle highs on the publication at 0.7727, but seems unable to hold its ground.
  • NZD/USD traded around 0.6870, well above support at 0.6820.

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