Highlights November 14, 2023 / 08:57 pm UTC

North American Summary and Highlights 14 Nov

By Dave Sloan


A softer than expected US CPI sent the USD sharply lower. 

North American session

The USD fell sharply after a weaker than expected October CPI number, which was flat on the month and up 0.2% core. While this was only modestly softer than expected it triggered a big USD decline as UST yields plunged, with the USD continuing to fall until shortly before the close. EUR/USD gained over 1.5 figures to 1.0880 and AUD/USD was up over 2% to trade above 0.65. Other European currencies kept pace with the EUR, with the SEK outperforming, rising more than 2% on the day. The JPY underperformed, though gained momentum in late trade to drop around 1% to briefly touch below 150.20. 

The data got a cautious welcome form the Fed’s Barkin, although he said he still sees risks on both sides with Goolsbee giving a similar response later. The USD move looks like an overreaction, as does the JPY decline on the crosses, which reflected a strong positive equity market reaction.The Cleveland Fed’s Median CPI at 3.9% annualized, while softer than all recent months bar July’s 2.3%, is still high enough to suggest that it is too soon for the Fed to declare victory over inflation.

European morning session

The EUR was generally a little firmer through the European morning helped by a stronger than expected ZEW economic sentiment index. EUR/USD gained around 20 pips to trade above 1.0720. The EUR’s gains were not generally matched by other currencies, so the EUR made similar gains on the crosses. USD/JPY was unchanged, as was USD/scandis, and USD/CAD was marginally higher, but AUD and GBP both managed small gains against the USD, while losing a little ground against the EUR. 

GBP did manage some early gains against the EUR after UK labour market data, but these were more than reversed by the end of the morning. The official UK ONS data did indicate strong earnings growth in the 3 months to September, but this data is seen as unreliable, and the HMRC data for October in contrast showed a further decline in pay growth for payrolled employees. 

EUR/SEK moved higher after Swedish October CPI came in below expectations at 4.2% y/y, although this was still higher than September and above the Riksbank’s September projections. The initial SEK decline was reversed, but EUR/SEK moved back up after the ZEW survey later in the session. 

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Analyst Declaration
I, Dave Sloan, the lead analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.