Dollar soars broadly in early US session after stronger than expected consumer inflation reading. Futures tumble while 10-year yield is back pressing 4% handle. Nonetheless, the greenback is overwhelmed by Pound on rumors that UK Prime Minister Liz Truss is going to further backtrack on the mini-budget. The eventual near term fate of Sterling will still depend on the extent Truss is retreating. Australian Dollar is leading commodity currencies lower, followed by Euro and Swiss Franc. Yen is steady overall, except versus Dollar of course.
Technically, 10-year yield is resuming recent up trend. A big question is whether it could stay firm above 4% handle and close the week above there. If that happens, there is prospect of further upside acceleration until FOMC rate decision and release of new economic projection in early November. 61.8% projection of 2.525 to 3.992 from 3.568 at 4.474 is a bit far. But never say never.
In Europe, at the time of writing, FTSE is down -1.40%. DAX is down -0.71%. CAC is down -1.32%. Germany 10-year yield is up 0.079 at 2.391. Earlier in Asia, Nikkei dropped -0.60%. Hong Kong HSI dropped -1.87%. China Shanghai SSE dropped -0.30%. Singapore Strait Times dropped -1.39%. Japan 10-year JGB yield dropped -0.0034 to 0.251.
US CPI slowed to 8.2% yoy in Sep, but core CPI rose to 6.6% yoy
US CPI rose 0.4% mom in September, above expectation of 0.2% mom. Core CPI (all item less food and energy) rose 0.6% mom, above expectation of 0.5% mom. Energy index dropped -2.1% mom, with gasoline down 4.9%. Food index rose 0.8% mom.
For the 12 months ending September, CPI slowed from 8.3% yoy to 8.2% yoy, above expectation of 8.1% yoy. Core CPI, on the other hand, accelerated from 6.3% yoy to 6.6% yoy, above expectation of 6.5% yoy. Energy index slowed from 23.8% yoy to 19.8% yoy. Food index was up 11.2% yoy.
US initial jobless claims rose to 228k, slightly above expectations
US initial jobless claims rose 9k to 228k in the week ending October 8, slightly above expectation of 225k. Four-week moving average of initial claims rose 5k to 212k.
Continuing claims rose 3k to 1368k in the week ending October 1. Four-week moving average of continuing claims dropped -8k to 1364k.
Daily Pivots: (S1) 0.6242; (P) 0.6271; (R1) 0.6305; More…
AUD/USD’s decline extends today and intraday bias remains on the downside. Next target is 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155. Firm break there will pave the way to 0.5781. On the upside, above 0.6345 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 0.6539 resistance holds.
In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.6680 support turned resistance holds. Next target is 0.5506 low. Medium term momentum will now be closely monitored to gauge the chance of break of 0.5506.
Economic Indicators Update
|23:01||GBP||RICS Housing Price Balance Sep||32%||48%||53%||51%|
|23:50||JPY||Bank Lending Y/Y Sep||2.30%||2.20%||1.90%|
|23:50||JPY||PPI Y/Y Sep||9.70%||8.80%||9.00%||9.40%|
|00:00||AUD||Consumer Inflation Expectations Oct||5.40%||5.40%|
|06:00||EUR||Germany CPI M/M Sep F||1.90%||1.90%||1.90%|
|06:00||EUR||Germany CPI Y/Y Sep F||10.00%||10.00%||10.00%|
|12:30||USD||Initial Jobless Claims (Oct 7)||228K||225K||219K|
|12:30||USD||CPI M/M Sep||0.40%||0.20%||0.10%|
|12:30||USD||CPI Y/Y Sep||8.20%||8.10%||8.30%|
|12:30||USD||CPI Core M/M Sep||0.60%||0.50%||0.60%|
|12:30||USD||CPI Core Y/Y Sep||6.60%||6.50%||6.30%|
|14:30||USD||Natural Gas Storage||126B||129B|
|15:00||USD||Crude Oil Inventories||0.9M||-1.4M|