Dollar Up Following Waller, Ahead of CPI
The U.S. Dollar is up against major peers as Traders await Consumer Price Index (CPI) numbers for the month of October at 8:30am.
The Core Month-over-Month figure is expected to come in at 0.2%, which would be a slight reduction from the previous month’s figure of 0.3%. This inflation report is being closely watched for signals that could shape the Federal Reserve’s interest rate path. Fed Governor Christopher Waller spoke at the Bank of England’s conference in London this morning and stated that he would be in support of a 25 bps at that December meeting, but that he would also support a 50 bps move should today’s CPI report indicate that inflation has continued to accelerate. Traders have fully priced in a hike for December as a result.
What to Watch This Week…
- Producer Price Index (PPI) for October - Friday, 8:30am
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro is down against the Dollar this morning following Waller’s remarks and despite broadly hawkish commentary from several members of the European Central Bank governing council. ECB President Christine Lagarde stated that inflation will remain high in the quarters to come, and Bank of Latvia Governor Martins Kazaks indicated that present conditions make a hike for December likely necessary, but Kazaks also stated that future rate hikes decisions are becoming more nuanced as the ECB has to weigh inflation concerns against growth risks. Bank of France Governor Emmanuel Moulin stated that the ECB’s main concern is whether energy inflation will spread to the broader economy but did not commit to a December hike as they are seeing somewhat positives signals in that regard. Traders currently assign a roughly 85% probability to a hike at the ECB’s December meeting.
GBP
The British Pound is down against the Dollar this morning on Waller’s remarks. U.K. government bonds, commonly referred to as Gilts, have extended gains this morning as falling oil prices have resulted in some Traders paring expectations of an aggressive tightening cycle from the Bank of England. Brent Crude is trading around $90 per barrel for the first time since August. Traders currently assign a just over 50% probability to the likelihood of the BoE hiking rates in December. BoE Deputy Governor Sarah Breeden did speak this morning but gave no signals on monetary policy.