EUR/USD, EUR/CHF, USD/JPY flows - mkt rebalancing to shift in Fed odds

Digestion of the post-CPI dollar step-up overnight with USD/JPY held by resistance and offers around the 159 level, while EUR/USD still references 1.1150/30 congestion area ahead of the 1.1105. It’s the low yielders that have characteristically really struggled with the Fed re-pricing, seeing for instance even EUR/CHF maintain its corrective bounce out of recent steep losses, respecting and lifting off the 0.91/9095 May lows, especially while recent tech and France issues have quietened from the headlines if not gone away.  

The follow up Fed commentary was all pretty hawkish over the NY session, following Waller and Logan, Goolsbee noting they have a ‘real inflation situation on their hands’ - data was bordering disturbing and everything is always on the table - though it wasn’t all one way on the speed-up narrative with Paulson looking for gradual rate hikes. Median Cleveland CPI data later also confirmed that the core CPI print was not distorted also coming in at 0.3%, to support the expressed concerns over the gains being broad based.

Current market pricing has moved to just over 10% chances of 50bp, and fully 25bp from probabilities of 25bp in the 80% prior to the data and Fed comments.

Today’s speakers switch to Europe with ECB’s Lagarde and then BoE’s Cleland and Hall due to speak at a panel. Today is a partial US holiday for Veterans Day.