EUR/USD, USD/JPY flows: USD net little changed on as expected CPI data
Some sharp fluctuations around the data, but the USD is net little changed after the numbers came in broadly on consensus
US headline November CPI a tad above expectations at 0.1% m/m, but the y/y was on consensus at 3.1%, and the core was also on consensus at 0.3% m/m, 4.0% y/y. So hard to really see this as out of line with expectations, and it shouldn’t affect the Fed’s statement tomorrow.
After an initial blip higher the USD traded lower after the data but is settling near pre-data levels. Equities have also returned to the levels seen before the release. We continue to see USD/JPY as vulnerable, with the 10 year yield spread still pointing lower, but a major move looks unlikely before the FOMC statement tomorrow. Conversely, EUR/USD looks a little stretched above 1.08, but has gained some support from today’s ZEW data, and is likely to hold close to 1.08 ahead of the central bank meetings.
