Dollar falls after U.S. CPI data miss forecast and continued weakness in the Dow: Oct 12, 2018

Market Review - 11/10/2018  23:54GMT  

Dollar falls after U.S. CPI data miss forecast and continued weakness in the Dow

The greenback ended broadly lower against its G7 peers on Wednesday due to soft U.S. inflation data as well as further weakness in U.S. equities. The British pound rose to a fresh 2-1/2 week high before retreating as investors remained cautious on Brexit headlines ahead of EU summit next week.  
Reuters reported the U.S. Consumer Price Index increased 0.1 percent last month after rising 0.2 percent in August, the Labor Department said. In the 12 months through September, the CPI increased 2.3 percent, slowing from August's 2.7 percent advance.  
Excluding the volatile food and energy components, the CPI edged up 0.1 percent for the second straight month. The so-called core index had increased 0.2 percent in May, June and July.  
In the 12 months through September, the core CPI increased 2.2 percent. Economists polled by Reuters had forecast both overall and core CPI climbing 0.2 percent in September.  
Versus the Japanese yen, although dollar extended its recent decline to a fresh 3-week low at 131.97 in Asian morning on selloff in Asian equities, price erased intra-day losses and recovered to 112.54 on short covering before retreating on falling U.S Treasury yields. Price later hit a 3-week trough of 111.84 due to further weakness in the Dow.  
The single currency went through a volatile session. Although price initially jumped to 1.1572 in Asian morning on usd's weakness, price retreated to 1.1535 in European morning, however, euro found renewed buying there and hit session highs of 1.1599 after New York open on soft U.S. inflation data before retearting to 1.1546 on profit-taking. The pair later climbed back to 1.1598 near the close.  
The British pound went through a roller-coaster ride. Although price spiked up to 1.3244 in Asian morning on usd's broad-based weakness, price fell to 1.3183 in European morning on cross selling in sterling, however, cable found renewed buying and rose to a fresh 2-1/2 week high at 1.3250 Reuters) on soft U.S. CPI before retreating to 1.3184 as investors remained cautious ahead of EU summit next week.  
In other news, Reuters reported Britain will soon put forward its additional proposals for a backstop arrangement to prevent a hard border with EU member Ireland, Prime Minister Theresa May's spokeswoman said on Thursday.  
On the data front, Reuters reported initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 214,000 for the week ended Oct. 6, the Labor Department said on Thursday.  
Economists polled by Reuters had forecast claims slipping to 206,000 in the latest week from 207,000 a week earlier.  
Data to be released on Friday :  
New Zealand manufacturing PMI, RBA's Financial Stability Review, China imports, exports, trade balance, Germany CPI, HICP, EU industrial production, U.S. import prices, export prices and consumer sentiment.  

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