US CPI data jumps to 13-year high; dollar still firm
The main event today was the release of the US CPI data ahead of the FOMC minutes later in the session. The annual inflation rate increased to a 13-year high of 5.4%, up from 5.3% in August and beyond market estimates of 5.3%. Consumer prices increased by 0.4% monthly, slightly exceeding predictions of 0.3%.
The dollar seems to be keeping its recent gains. USD/JPY is holding below the 34-month high of 113.70. However, the euro is recouping some losses, trading near $1.1565, after the drop to the low of $1.1525, reached in July 2020. US futures are suggesting a positive open after three consecutive red days.
FOMC minutes is the next event of the day
The minutes of the FOMC’s most recent meeting will be made public later in the day. The Fed delivered a hawkish hold at its September meeting. Tapering “may soon be appropriate,” according to the Fed, given how well the economy and the job market have been doing lately. If the economy grows as projected, Federal Reserve Chair Jerome Powell indicated that the Fed may make a move on tapering at its next meeting. While a “pretty excellent” jobs report is required by the Fed, he believes the benchmark has been “all but met.” Finally, Powell predicted that the gradual withdrawal of stimulus will be completed by the middle of 2022.
Earning releases: Delta, Blackrock and JPMorgan
With a profit of $1.2 billion in the third quarter, Delta AirLines had its second profit since the start of the coronavirus pandemic but its first without US government assistance.
The world’s largest asset manager, BlackRock, posted better-than-expected third-quarter earnings, while assets under management fell short of expectations. Growth in performance fees pushed earnings per share by 19% to $10.95, helping BlackRock’s profits soar.
JP Morgan reported better-than-expected loan losses of $1.5 billion for the third quarter on Wednesday, beating analyst estimates.
UK’s weak data hold pound around $1.36
The release of UK data and adjustments earlier today support the idea that the UK economy is slowing even as policymakers consider reducing stimulus. The trade deficit was -GBP3.7 billion, versus -£2.8 billion predicted, and -£2.95 billion in July. The poor data, Brexit tensions and energy crises continue to mount up, therefore a period of underperformance may come for the pound. Sterling is trading slightly higher above the $1.36 round number.