FX.co ★ The dollar fell, but growth perspectives persist

Despite the fact that on Friday, there were data on consumer inflation in the US that is not in line with expectations which can be characterized as ambiguous, the Fed still has the opportunity to raise interest rates, the third time this year.

According to the published data, the consumer price index (CPI) on an annual basis grew by 2.2% against the previous value of 1.9%. It was expected that the figure will show growth of 2.3%. The monthly value of consumer inflation in September rose sharply, by 0.5%, which exceeded the growth forecast by 0.4%. The base consumer price index (CPI) remained unchanged in annual terms and showed an increase of 1.7%, as it was a year earlier. At the same time in September, it grew by only 0.1%, while it was assumed that the indicator would add 0.2%, as in August.

Also on Friday, there were other important data that have an unquestionable impact on the currency market, and not only it, it is the volume of retail sales, which last month gained 1.6% against the 0.1% decline in August. But the indicator did not reach the predicted value of 1.7%, although it should be recognized that these figures still show a powerful surge in retail sales. But we must admit that the reason for this was after all the consequences of a series of hurricanes that hit the southern states of the United States.

The market reacted to the released data unequivocally by selling the US dollar. But, most likely, this reaction was situational, since the data came out not quite bad, but not as remarkable as the figures on production inflation published earlier in the day, which surpassed all expectations.

Against the background of the depreciation of the dollar, all major currencies rose, except for the euro, which fell under pressure amid a speech by M. Draghi, the ECB president, who said on Friday that "core inflation has not yet shown convincing signs of sustained growth" and that "as before a very significant monetary stimulus is required. " After these words, the euro, paired with the US dollar, lost all its growth.

Negatively, the US government debt market reacted to these statistics. Yields on US Treasury bonds fell. The yield on the benchmark of 10-year Treasuries fell by 2.07% and closed on Friday's trading at the level of 2.274% under the influence of a decrease in the expectation of growth rates in December. Futures on federal funds rates also showed a decrease in the possibility of raising rates at the December meeting of the Fed to 82.7% from 91.4%.

In general, observing the behavior of the markets on Friday, most likely, one can speak about short-term, situational reaction of investors to the data of economic statistics. It is likely that the passions will subside in the new week, and the markets will follow with new inspiration the incoming values of economic indicators already taking into account the beginning of the process of reducing the balance of the Fed and the appointment of the new US Central Bank head D. Trump.

Forecast of the day:

The pair EUR/USD is trading below 1.1825. The fall in the expectation of a reduction in stimulus measures in the euro area or their complete liquidation put pressure on the single currency, which could fall to the level of 1.1700, paired with the dollar.

The pair EUR/GBP fell below 0.8875, which could cause its further fall to 0.8755.