U.S. Data Surprise!

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Good morning and welcome to the GPS Wallet Podcast for Wednesday the 15th of November. I don’t like to pat myself on the back, but when I said watch out for data surprises, I was rewarded with the quarter’s most active day.  The US dollar fell against its G10 peers yesterday following the release of softer than expected inflation data, which boosted the 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 also of 5.8%. Treasury yields and the greenback tumbled, with Eurodollar breaching recent stubborn resistors to trade within a whisker of 109, while Stirling Dollar briefly touched 125 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 Fed to bring forward a rate cut. In the UK, inflation data released earlier this morning showed that UK inflation fell to a 2 year low, straightening 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 the beginning of 2021. The fall was largely driven by lower energy prices, with gas costs falling by 31% and electricity supply falling by 15.6%. The report will give some comfort to PM Rishi Sunak and Bank of England’s Governor Andrew Bailey, allowing them the opportunity to declare victory on their pledge to cut inflation in half. The pound has taken the UK print in its stride, with a pair reacting less to the UK inflation report than it did to yesterday’s US print. The support cable now comes in at 1.2430, with resistance seen around yesterday’s high at 1.25. Sterling Euro remains boring, range bound with it between 1.14 and 1.1520. Please note, GPS capital markets have excellent tools in Fxper to help treasurers. Please contact us or like below for a call back. Thank you.