US Inflation report and unemployment claims mixed
Investors are digesting today’s US CPI data and unemployment claims, which came out at 13:30 GMT. The figures could force the Fed to consider delivering tighter monetary policy measures, especially as inflation came in stronger. Supply shortages continue to linger and are feeding price pressures, while the rising 10-year yield is aiding the greenback.
The dollar index has steered above the 94.00 mark, while the euro has dipped to $1.1535, and the pound is testing the $1.3480 handle. The US 10-year yield, which has turned back up after yesterday’s Brainard-related fall, following Biden’s interviewing news, appears to have also pulled the USDJPY pair back above the 113.00 per dollar mark, currently at 113.34.
Fed officials are keeping an eye on inflation and rhetoric seems to be getting more hawkish around rate hikes, even from ultra-dovish officials like Kashkari. Yesterday’s October PPI came in as expected, which signals that inflation may remain for a while longer, especially as elevated costs of production are pushed over to the customer.
The data highlight for today, the US inflation and unemployment claims came in mixed. September’s headline number came in at 0.9% versus the estimate of 0.6%, while core inflation from October’s 0.2%, hit 0.6%, also beating expectations of 0.4%.
Weekly jobless claims disappointed hitting 267k unemployment claims in the previous week ending November 5, overshooting the expectations of 257k but coming in softer than the week before that.
The ECB is coming under pressure from German officials who are getting worried about inflation. They are suggesting the ECB come up with a plan to exit ultra-loose policy, otherwise with elevated prices, lasting effects from inflation could become a problem.
Oil dips and Putin delivers boost to natural gas reserves
WTI futures remain largely in the vicinity of its recent highs of $85.39 but have dipped slightly to $83.65 per barrel, surrendering some of yesterday’s gains, on the news that President Biden opts out of the US dipping into its oil reserves. This may have disappointed market expectations and caused prices to retreat slightly.
With colder months on the horizon, it seems Europeans pockets may benefit from the slump in gas prices after its lowest supply inventories in a decade got a boost from Russia. How the situation will evolve in the coming months though is another story.
The Canadian dollar returned to the C$1.2435 level following its drop earlier on in the Asian session, after remarks from BOC Governor Macklem that touched on reducing inequality and inflation worries. The consumer price index has hit an 18-year high, and he reiterated that supply shortages could push up inflation rates further. Ultimately, this puts risks on the cost of living.
Chinese yearly CPI and PPI figures beat estimates coming in at 1.5% and 13.5% respectively, while more loans were issued in September, but commodity currencies like the aussie and kiwi remained on the back foot. The aussie was at $0.7354 and the kiwi has dropped to 0.7085. The Preliminary ANZ business confidence worsened to -18.1, signalling a negative economic outlook as many businesses are continuing to experience higher costs.
At 14:00 GMT, US Final wholesale inventories for October are out followed by US crude oil inventories at 14:30 GMT, which will be interesting to see after last week’s drop of 2.5mln barrels.
At 18:00 GMT, the US 30-year Bond auction will be delivered.
Then at 21:45 GMT, New Zealand’s monthly food price index is planned, while Japan will produce its yearly PPI figures at 23:50 GMT.
Australian consumer inflation expectations are scheduled at 00:00 GMT, while the country’s employment data is expected at 00:30 GMT.
