The tired dollar collapsed like a house of cards on Friday, after US CPI figures and retail sales for September failed to pack a punch. Although US consumer prices rose 0.5%, the largest increase seen in eight months on the back of rising gasoline prices, underlying inflation remained subdued. While markets are still expecting the Federal Reserve to raise interest rates in December, concerns over prolonged periods of depressed inflation may cloud the prospect of higher US interest rates in 2018. On the bright side, US retail sales recorded their biggest increase in two and half years in September, jumping 1.6%. Although this was below market estimates, this figure is still encouraging and continues to support the bullish sentiment towards the US economy.
The Dollar Index found itself under extreme selling pressure following the economic releases, with prices trading towards 92.80. Sustained weakness below the 93.00 may encourage a further decline towards 92.50.
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