Dollar strengthens, awaiting CPI data

ll eyes are now on the upcoming U.S. inflation data, with expectations of a 2.3% annual rise—the lowest in two years

By Farah Mourad | 10 October 2024

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  • Japan's PPI inflation for September surpassed expectations at 2.8%

  • The EUR/USD trading just below the mid-1.0900s

  • Gold prices saw a slight recovery after a prolonged six-day decline

Inflation and Currencies

U.S. Markets: The release of the Federal Reserve minutes yesterday didn’t spark much reaction in the markets, with no unexpected insights. The U.S. dollar maintained its upward momentum, and yields on the 10-year Treasury bonds climbed to 4.07%, up by approximately 5 basis points. Investors are now turning their focus toward the U.S. Consumer Price Index (CPI) report for September. Projections suggest a 2.3% year-over-year increase (the lowest since 2021) and a 0.1% rise month-over-month. Core inflation is expected to come in at 3.2% annually, with a 0.2% monthly increase.

Japan: In Japan, Producer Price Index (PPI) inflation for September came in higher than anticipated, at 2.8% year-over-year, surpassing the forecast of 2.3% and August’s 2.5%. Although the month-on-month figure was flat, which beat expectations of a 0.3% decline, the Japanese yen showed minimal movement, gaining just 0.11% with USDJPY to trade around 149.4

Germany: Germany’s retail sales posted positive growth in August, rising by 1.6% on a month-over-month basis, following a decline of 1.1% in June and a 1.5% gain in July. Annually, the country’s retail sales increased by 2.1% in August, highlighting resilience in the Eurozone's largest economy despite broader challenges.

The EUR/USD pair remains stuck in a tight range below the mid-1.0900s, consolidating its losses after touching a two-month low the previous day.

Commodities:

  • Gold: Gold saw some positive movement on Thursday, potentially breaking a six-day losing streak that pushed the price down to a nearly three-week low around $2,605. The slight recovery in the gold price is likely due to traders repositioning ahead of the U.S. inflation data release.
  • Crude Oil (WTI): West Texas Intermediate (WTI) crude oil is trading around $73.20, showing some gains amid concerns about potential supply disruptions due to rising tensions in the Middle East and the approach of Hurricane Milton in the U.S.
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