US Dollar Drops, Gold Pops, S&P 500 Whipsaws on US CPI Rise

USD, CPI Price Analysis & News

  • US CPI Prints Ahead of Estimates
  • USD Dips, Gold Gains, S&P 500 Whipsaws

US CPI Prices Ahead of Expectations

BOTTOM LINE: US CPI rose 0.6% on the month, 0.1ppts above expectations, which saw the yearly rate at 2.6% (highest since Aug 2018), ahead of the 2.5% consensus. Meanwhile, the core reading also printed ahead of forecast at 0.3% on the month and 1.6% on the year. However, with the Federal Reserve covering at length that they will look through the inflation spike in the next few months as they remain adamant that inflation will be transitory, this data point has little in the way of policy implications. In turn, markets saw a broadly muted reaction.

MARKET REACTION: In response to the higher than expected figure, the US Dollar dipped to 92.00, which in turn saw the Euro in particular pick up a slight bid, although this was very much in line with the option implied move. That said, in light of the USD slipping, gold edged up $10 to $1740, while the US 10yr fell 3bps to 1.66% with both the Dow Jones and S&P 500 seeing a choppy reaction.

USD, US RATES & GOLD REACTION TO US CPI

Source: Refintiv

LOOKING AHEAD: Additional tier 1 data from the US will be in focus with the US retail sales scheduled later this week where risks are tilted to the upside.

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US Dollar Drops, Gold Pops, S&P 500 Whipsaws on US CPI Rise