Air hole for the dollar after the loss of speed in US inflation

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Around 8:30 p.m., the dollar melted against the British currency, which gained 1.73% to $1.2492, and against the euro, which climbed 1.60% to $1.0869.

The dollar fell sharply on Tuesday against the pound and the euro, weighed down by the slowdown in American inflation which reinforces the probability of a pause in interest rate increases by the American central bank (Fed) .

Around 7:30 p.m. GMT, the dollar melted against the British currency, which gained 1.73% to 1.2492 dollars, and against the euro, which climbed 1.60% to 1.0869 dollars – to higher levels. since September for both currencies.

“Today’s inflation data in the United States offered a further signal that the work of the Federal Reserve” (Fed) of raising key rates “is probably finished”, indicated Lindsay James, of Quilter Investors .

The inflation rate actually fell in October in the United States, to 3.2% over one year, compared to 3.7% in September, thanks in particular to the drop in gasoline prices at the pump, according to the CPI index published Tuesday by the Labor Department.

“This weaker inflation data means the market will have a harder time absorbing” further rate hikes, and “without further upward shocks to inflation, policymakers will find it difficult to distract the market from discussions of a drop in rates in 2024,” noted Jane Foley, Rabobank analyst, interviewed by AFP.

Bond yields fell very sharply, also causing the greenback to decline. Rates on ten-year US Treasury bonds fell to 4.45% from 4.63% the day before. Those at two years decreased to 4.82% against 5.03% on Monday.

“We will closely monitor comments from Fed officials over the coming weeks to see how long-term bond yields influence their calculations of whether federal funds rates are “tight enough,” Compernolle said. , from FHN Financial.

For its part, the pound benefited somewhat from “better employment data” in October in the United Kingdom, estimated Derek Halpenny of MUFG, which could give more room for maneuver to the Bank of England to continue a restrictive policy on its rates.

The analyst cited in particular the first estimates for October 2023 which show an increase of 33,000 in the number of salaried employees, “contrary to the expected decline of 17,000”, data which “paints a better picture of demand (for labor ) UK”.

The unemployment rate remained at 4.2% over the three months ended at the end of September, compared to the three months ended at the end of August, the National Statistics Office (ONS) said on Tuesday.

This article is originally published on allnews.ch

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