The US dollar is stronger following today’s CPI inflation report.
Prices rose 3.7% y/y compared to 3.6% expected as shelter and energy inflation drove the bulk of gains. Core inflation was in-line but overall the report was worrisome enough for the market to push up Treasury yields and the US dollar. USD/JPY rose to 149.44, which is only 9 pips from the post-non-farm payrolls spike high.
EUR/USD fell to 1.0574 after the numbers from 1.0620 beforehand.
EURUSD 10 mins
The move is validated by the Treasury market with 10-year yields up to 4.62% from 4.55% pre-data. S&P 500 futures are virtually flat after the numbers, erasing a 20-point gain.
Yesterday, the market quickly faded a hot PPI report but today’s dollar strength is lingering.
A decline in the euro today would end a six-day winning streak for the common currency.
As for what’s next, I’ll be keenly watching bonds. Yesterday the US Treasury sold 10-year notes at an unexpectedly high yield and that could be an ominous signal that the recent high won’t be the peak.
US 10 year yields daily