Dollar Trying to Recover from Wednesday’s Selling

The greenback was trying to erase yesterday’s losses and the dollar index edged higher from the intraday low, despite not so positive inflation data from the US.

The core PCE inflation index, which is the favorite way of measuring inflation for the Fed, unexpectedly deteriorated to 1.8% in October, down from 1.9% (revised lower from 2.0%) previously. The normal gauge stayed at 2.0% year-on-year. Slowing inflation can deter the Fed from raising rates, along with other factors such as weakening economic momentum.

From other news, personal spending soared to 0.6% from 0.2%, while personal income also accelerated to 0.5% from 0.2% previously. Moreover, initial jobless claims surged to 234,000 from 224,000 previously, while continuing claims also worsened to 1.71 million from 1.66 million in the previous week.

US yields continue do drop sharply after Wednesday’s dovish shift from Jerome Powell and the 10-year yield is now testing the 3.0% level to the downside. If the yield drops below this level, we could see further pressure toward the 200-day moving average at 2.96%.

Stocks trimmed their Wednesday’s gains and US benchmarks opened a bit lower on Thursday, while EU indices gave up nearly 1%. Oil managed to erase losses and returned from below the 50 USD level to trade at around 51.30 USD, some 2% higher on the day.

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