US CPI misses and weakens US Dollar

EURUSD, H1

The dollar fell following the mix of data, which saw retail sales marginally better than forecast, overall, and on an ex-auto basis. Headline CPI was very close to expectations, though the core reading missed by a tenth. With the Fed showing concern over persistently low inflation, the cooler CPI outcome appears to have been the FX driver. EURUSD spiked to 1.1872 from under 1.1810, as USDJPY slid to 111.71 from 112.25.

U.S. retail sales climbed 1.6% in September, with sales ex-autos up 1.0%, both a little stronger than forecast. But, the 0.2% decline in August headline sales was nudged up to -0.1%, and the ex-auto gain was revised up to 0.5% from 0.2% previously.

U.S. CPI rose 0.5%, with the core rate up 0.1% in September. not as hot as feared after the PPI jump yesterday. August gains of 0.4% overall and 0.2% on the core were not revised. Compared to last year, the headline number rose to a 2.2% y/y pace, versus 1.9% y/y previously, while the ex-food and energy component was steady at 1.7% y/y. The components showed energy led the uptick, climbing 6.1% after the prior 2.8% gain. Transportation increased 2.8%, while commodities were up 1.1%. Aside from those, gains were more modest. Food prices increased 0.1%. Housing costs edged up 0.2%, as did the owner equivalent rent measure. Medical care and apparel prices each fell 0.1%. Data should give Treasuries a boost.