The result showed a year-on-year increase of 3.7%, surpassing the anticipated 3.6% and reaching levels similar to August. This led to a surge in the US dollar, accompanied by rising bond yields. With the recent release of the Federal Reserve’s FOMC minutes this week, which was interpreted as cautious, and increasing speculation of a pause in US interest rate hikes, the unexpected strong inflation figures forced a shift in market sentiment. It appears that the market had to unwind its accumulated US dollar short positions.
Today, we have the release of several economic indicators, including the September US Import Price Index, the Export Price Index, and the preliminary reading of the University of Michigan Consumer Sentiment Index for October. The Import Price Index is expected to show a decline of 1.4% year-on-year, indicating a continued downward trend. The University of Michigan Consumer Sentiment Index is expected to decrease from 67.1 to 38.1, although it’s not anticipated to have the same level of impact as the previous day’s CPI release.
The question now is how much strength the US dollar will maintain as we head into the weekend. Will it be pushed back into a downward trend, or will it continue its strength? This will likely depend on the movements of US stocks and bonds, making for a cautious market environment.
Despite the resurgence of USD buying due to a reversal of USD selling, GOLD remains firm. With strong upward pressure, it’s viewed with a buying perspective. Regarding EURUSD, even though it has been declining, significant options are clustered at 1.0515 and 1.0470, limiting the downside. Therefore, it’s also considered with a buying perspective.
