- The US dollar fell against its G10 peers yesterday following the release of softer than expected inflation data which boosted odds of rate cuts from the Federal Reserve. October’s CPI print came in at 4.6% year on year, down from the previous reading of 6.7% and below expectations of 4.7%. The core also beat expectations at 5.7% year on year, against expectations of 5.8% and under the consensus view of 5.8%. Treasury yields and the greenback tumbled, with EURUSD breaching recent stubborn resistance to trade within a whisker of 1.09 with GBPUSD briefly touching 1.25 before consolidating. The attention now shifts to this afternoon’s PPI print as markets look to see if inflation is sufficiently under control to allow the central bank to bring forward a rate cut.
- Data released earlier this morning showed that UK inflation fell to a two-year low, strengthening the view that interest rates have peaked. Consumer prices rose 4.6% from a year earlier, down sharply from the previous print of 6.7% and the lowest since 2021. The fall was largely driven by lower energy prices, with gas costs falling by 31% and the cost of electricity dropping by 15.6%. The report will give some comfort to PM Rishi Sunak, allowing him the opportunity to declare victory on his pledge to cut inflation in half. The pound has taken the print in its stride, with cable falling a touch with the pair reacting less to the UK inflation report than it did with yesterday’s US print. Initial support in cable comes in at 1.2430 with resistance seen at yesterday’s high around 1.25.
