On Thursday (October 10), during the Asian trading session, the US Dollar Index remained stable, currently hovering around 102.90; spot gold rebounded moderately, with the gold price trading near $2612 per ounce. Today, investors will focus on the US CPI data and speeches by officials such as Federal Reserve "number three" Williams, which are expected to trigger significant market movements.
The US Dollar Index has broken through 102.75, and if it remains above the current level, it may head towards 104 or higher levels in the short term. Attention is turned to the US CPI data scheduled for release today.
On Wednesday, driven by the Fed's September meeting minutes, the dollar rose, and gold fell for the sixth consecutive trading day.
The ICE US Dollar Index, which tracks the dollar against a basket of six major currencies, rose by 0.43% on Wednesday to 102.91. Spot gold closed down $14.13 on Wednesday, a decline of 0.54%, at $2607.71 per ounce.
The minutes of the Fed's September monetary policy meeting revealed deeper divisions within the Federal Reserve. Although only one Fed governor, Bowman, ultimately voted against, the minutes indicated that the divisions among policymakers were more severe than the nearly unanimous decision suggested.
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The FOMC's minutes released on Wednesday for the September 17-18 meeting stated: "Some participants indicated that they would have preferred to lower the target range by 25 basis points at this meeting, and a few others said they would also have supported such a decision."
After the release of the Fed's minutes, CME's "FedWatch" tool showed that the probability of the Fed cutting rates by 25 basis points in November fell from 85.2% the day before to 75.9%. This means that some market participants believe there is a 24.1% chance that the Fed will keep interest rates unchanged, higher than 14.8% on Tuesday.
At 20:30 Beijing time on Thursday, the US Bureau of Labor Statistics will release the September Consumer Price Index (CPI) report. Investors will focus on this report to gain further insight into the outlook for US interest rates.
The market expects the year-on-year increase in the US CPI for September to fall from 2.5% to 2.3%. The September CPI is expected to rise by 0.1% month-on-month, lower than the previous 0.2%. The year-on-year increase in the US core CPI for September is expected to remain at 3.2%; the month-on-month increase in the core CPI for September is expected to fall from 0.3% to 0.2%.
FXStreet analyst Christian Borjon Valencia said that now, traders' attention has shifted to the US CPI data released on Thursday. The market estimates that inflation will continue to decrease. However, if the inflation rate is higher than expected, this will open the door for the Fed to pause the easing cycle.Swissquote Bank Senior Analyst Ipek Ozkardeskaya stated: "If Thursday's CPI data is weak enough, it may ultimately help to soothe the nerves of the dovish Federal Reserve and prevent the US dollar from entering a medium-term bullish consolidation area against many major currencies."
FXStreet Analyst Eren Sengezer noted that the core CPI month-on-month data could trigger a reaction in gold. The data excludes more volatile commodity prices and is not distorted by base effects. The market expects that after a 0.3% increase in August, the core CPI will rise by 0.2% month-on-month in September. If the reading is 0.2% or lower, it may put pressure on the US dollar. A rise of 0.5% or higher could lead investors to doubt the disinflation process and boost the US dollar, causing gold prices to turn downward.
Investors are also paying attention to the US initial jobless claims data. At 20:30 Beijing time on Thursday, the number of initial jobless claims in the United States for the week ending October 5 will be released, with an expected 230,000, compared to 225,000 the previous week.
Regarding speeches by Federal Reserve officials, at 23:00 Beijing time on Thursday, New York Fed Chairman Williams will give a speech and participate in a discussion on economic prospects and monetary policy.
As the Chairman of the New York Fed, Williams also serves as Vice Chairman of the Federal Open Market Committee (FOMC) and, like the Federal Reserve Board members, has a permanent voting right, being regarded as the "third man" of the Federal Reserve.
In terms of monetary policy, Williams' say is second only to Chairman Powell. Before becoming the Chairman of the New York Fed, Williams had also served as the Chairman of the San Francisco Fed for nearly 7 years.
In addition, at 21:15 Beijing time on Thursday, Federal Reserve Governor Cook will give a speech. At 22:30 Beijing time on Thursday, Richmond Fed Chairman Barkin will participate in a fireside chat.
US Dollar Index
The US Dollar Index rose yesterday, reflecting the confidence gained from the FOMC meeting minutes that the Federal Reserve will not continue to ease policy so aggressively. Now, the US Dollar Index needs to maintain its current level to be bullish in the short term to 104 or higher. Pay attention to today's US CPI release to clarify the recent trend.