U.S. Dollar Slides On Slowing Consumer Inflation

The U.S. dollar lost ground against its key counterparts in the European session on Thursday, following the release of data showing an unexpected rise in weekly jobless claims last week and a slowdown in consumer inflation for September, which eased concerns about more aggressive path for rate hikes by the Federal Reserve.

Data from the Labor Department showed that the consumer price index inched up by 0.1 percent in September after rising by 0.2 percent in August. Economists had expected prices to increase by another 0.2 percent.

Excluding food and energy prices, core consumer prices also crept up by 0.1 percent in September, matching the uptick seen in the previous month. Core prices had been expected to rise by 0.2 percent.

The report also said the annual rate of consumer price growth slowed to 2.3 percent in September from 2.7 percent in August, while the annual rate of core consumer price growth was unchanged at 2.2 percent.

A separate report released by the Labor Department unexpectedly showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended October 6th.

The report said initial jobless claims rose to 214,000, an increase of 7,000 from the previous week’s unrevised level of 207,000. Economists had expected jobless claims to edge down to 206,000.

Treasury yields have moved notably lower following the release of the data, with the yield on the benchmark ten-year note sliding by 5.6 basis points to 3.169 percent.

The currency has been trading lower in the Asian session, following the criticism by U.S. President Donald Trump over the faster pace of rate hikes by the Fed.

The greenback lost 0.4 percent versus the pound, falling to near a 3-week low of 1.3246. The pair had ended Wednesday’s trading at 1.3188. The greenback is seen finding support around the 1.35 area.

The greenback depreciated to 1.1599 against the euro, a level unseen since October 1, and represented a 0.7 percent slide from a low of 1.1518 touched at 5:00 pm ET. The greenback is poised to target support around the 1.17 area.

The greenback declined to an 8-day low of 0.6523 against the kiwi, falling 1.2 percent from a low of 0.6445 hit at 5:00 pm ET. The pair was valued at 0.6446 when it had closed deals on Wednesday. On the downside, 0.68 is possibly seen as the next support level for the greenback.

The greenback dropped to 0.7129 against the aussie and 1.3025 against the loonie, after rising to 0.7046 and 1.3066, respectively in early deals. If the greenback falls further, it may find support around 0.725 against the aussie and 1.28 against the loonie.

The greenback fell back to 0.9858 against the franc, a pip short of an 8-day low of 0.9857 seen at 10:00 pm ET. The next possible support for the greenback is seen around the 0.97 level.

On the flip side, the greenback bounced off to 112.42 against the yen, from more than a 3-week low of 111.97 hit at 9:45 pm ET. The greenback is likely to challenge resistance around the 114.00 level.

Data from the Bank of Japan showed that Japan overall bank lending rose 2.3 percent on year in September, coming in at 528.660 trillion yen.

That exceeded expectations for an increase of 2.2 percent, which would have been unchanged from the previous month.

The material has been provided by InstaForex Company – www.instaforex.com

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