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US Inflation Report (CPI) Review:

  • Headline September US CPI missed expectations at 1.7% y/y, but given fears of an even deeper setback, traders are looking at the US inflation report as a relief.
  • Disinflation in headline inflation may continue: the US Dollar[1] is near its yearly high, energy prices have come down in recent weeks, and the ever-present US-China trade war continues to sap economic growth.
  • The US Dollar rallied following the release as Fed rate expectations discounted slightly lower odds of action by the FOMC[2] later this month.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides[3].

US economic data is holding sway over FX markets as traders take a reprieve from the intense US-China trade war headlines over the past 24-hours. Looking for clues for the October Fed meeting, the US inflation report had market participants on edge given growing fears of a US recession. It’s fairly typical to see low inflation coupled with low growth, after all.

The lack of a significant miss – the fear going into the data – may be helping drive the US Dollar rebound thereafter. Headline September US CPI missed expectations at 1.7% versus 1.8% expected (y/y), while US core CPI came in unchanged at 2.4% (y/y).

Disinflation in headline inflation may continue: the US Dollar is near its yearly high, energy prices have come down in recent weeks, and the ever-present US-China trade war continues to sap economic growth. The US Dollar rallied following the release as Fed rate expectations discounted slightly lower odds of action by the FOMC later this month.

Here are the data driving the US Dollar this morning:

- USD[4] Consumer Price Index (SEP): 0.0% versus 0.1% expected, from

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