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Nov 08 - 09:55 AM

USD: Likely More Sensitive To A Softer Inflation Print On Thursday - MUFG

By eFXdata  —  Nov 08 - 09:03 AM

MUFG Research discusses the USD outlook around this week's US CPI print for the month of October. 

"The immediate concern for setting Fed policy and driving US dollar performance though will be the release of the latest US CPI report on Thursday. Now that the US rate market has moved to price in a higher terminal rate for the Fed’s policy rate next year of between 5.00% and 5.25% following last week’s hawkish Fed policy update, market participants will be looking for another uncomfortably strong core inflation print to back up the need for the Fed to keep hiking rates for longer. So far this year, core inflation has surprised to the upside on seven out of ten occasions. The immediate US dollar reaction has been more mixed though," MUFG notes. 

"The US dollar’s inability to regain upward momentum following the Fed’s recent hawkish policy update suggests it will be more sensitive to a softer inflation print this month that could trigger a break below the bottom of the recent range between 110.00-115.00," MUFG adds.

MUFG Research/Market Commentary


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