US inflation expectations portrayed a strong downside move on Thursday as traders reassessed updates from the US Federal Reserve (Fed). The same seemed to have probed the US Treasury yields’ upside momentum of late, which in turn challenges the US Dollar Index (DXY) bulls ahead of the key Nonfarm Payrolls (NFP) data for October.
That said, the inflation precursors, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, dropped to the lowest levels since October 19 and 13 in that order.
While noting the details, the longer-term inflation expectations dropped to the lowest level in three weeks whereas the 5-year benchmark slumped to the lowest levels in 12 days with the latest figures being 2.40% and 2.54% respectively.
The US Dollar Index (DXY) failed to justify the downbeat inflation expectations while refreshing the three-week high near 113.00, sidelined of late.
Moving on, the US employment report for October will be crucial for the market players to watch for fresh impulse. Forecasts suggest that the headline US NFP could ease to 200K in October from 263K prior while the US Unemployment Rate may increase to 3.6% from 3.5% prior.
Also read: US October Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises
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