US Dollar Sinks After CPI Data

The US Dollar has dropped 30 pips across the board, meanwhile, commodities have jumped, Treasury yields have fallen and the dollar is under broad pressure following the CPI report.

The price move is a little tough to square with the data. The numbers were broadly in-line with the consensus, if not a touch on the hot side. This suggests that the market has been too long and some sensing that the United States is nearing peak CPI.

The remarks by Fed Chair Jerome Powell this week was that he is not freaking out about inflation. He still believes it will subside with omicron and when manufacturers catch up. The 37% y/y rise in used car prices is certainly going to unwind at some point so there’s a basis for what he believes. The strength of this move is being digested by traders.

The U.S. dollar fell to a fresh two-month low against a basket of currencies during Wednesday’s North America trading session as the latest CPI data had showed U.S. consumer prices rose solidly in December, but in line with economists’ expectations.

The U.S. Dollar Currency Index , which tracks the dollar against six major currencies, was down 0.3% at 95.339, its lowest since Nov. 15.