The US dollar gained overnight in Asian and European trading on expectations of a Consumer Price Index (CPI) reading this morning for October. The 6.2% reading was higher than the 5.9% expected and a significant increase over September’s 5.4%. The two-year Treasury yield jumped to 0.50% from 0.22% just weeks ago. The US dollar moved higher on the news as investors expect the Federal Reserve to pull forward rate increases.
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November 10, 2021
EUR/USD 1.1565 GBP/USD 1.3527 USD/CAD 1.2395 AUD/USD 0.7390 USD/JPY 113.45 USD/CNH 6.3849 USD/ILS 3.1092 USD/MXN 20.3708 USD/CHF 0.9121 USD/INR 74.3837 USD/BRL 5.4555 USD/SGD 1.3480 USD/DKK 6.4333 USD/SEK 8.6169 USD/NOK 8.5409
The dollar recouped Monday’s losses and is now flat for the week. Financial markets are still pricing in different interest rate scenarios with an increasing number of participants seeing the Fed as behind in removing monetary policy accommodation. The Fed’s Mary Daly spoke yesterday stating that the “eye popping” inflation data we are currently seeing should subside next year as price increases and supply chain issues moderate.GBP
The pound sank overnight versus the US dollar on renewed concerns over trading with the EU. Brexit related issues regarding the status of Northern Ireland’s trade position linger. BOE's Broadbent expressed concerns that the scarcity of workers is pushing up wages, suggesting that labor shortages are becoming a constraint on the economy. Broadbent does, however, think the issue will lessen over time.EUR
The euro weakened on overall dollar bullishness. ECB's Schnabel states that the central bank risks intensifying inequality if it raises interest rates before stopping its asset purchases – these higher rates will only disproportionately benefit the rich due to the assets they hold.CAD
The Canadian dollar is holding steady versus the US dollar as oil rebounds on CPI data. US authorities said Tuesday it is still engaging with countries on boosting supply and is looking at all of the tools it has available to ease the impact of high prices on consumers.ASIA/PACIFIC
JPY slipped against the USD by 0.54% with the pair trading at 113.45. US 10-year bond yields widened by 5 bps versus the Japanese 10yr bolstering dollar strength.
The Australian dollar edged lower and is currently trading down 0.27%. AUD/USD fell after Chinese inflation surged and amid growing concerns over the health of the indebted Chinese real estate sector.
The rupee weakened sharply against the US dollar, weighed down by a muted trend in domestic equities and a stronger greenback.
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