The dollar burst higher on Tuesday after surprisingly strong US CPI data lifted Treasury yields as investors increased their bets on Fed tightening.

The report showed monthly core inflation running at 0.3%, above expectations for 0.2%, and headline at 0.4%, versus the consensus forecast for 0.3%.

The release came after Fed Governor Chris Waller had said that the US central bank ought to consider raising rates by 50bps in December if October monthly CPI inflation came in at 0.3% or higher.

In a similar vein, Dallas Federal Reserve President Lorie Logan said after the CPI report that the US central bank needs to deliver at least two more quarter-percentage-point interest rate increases to bring down inflation, and may need to do so promptly to keep broadening price pressures from getting baked into the economy.

The overall level of troubled borrowing in the US economy rose modestly in the third quarter but did not appear to signal a notable deterioration in credit quality, a report from the Federal Reserve Bank of New York said.

Treasury yields rose 10-19 bps across maturities, led by the front end. The 2s-10s curve flattened by 5.93 bps at the mid rate.

EUR/USD fell fell below its 10- and 21-day moving averages, with a monthly gravestone doji adding to the bearish signals.

The US CPI report unraveled any support sterling derived from hawkish comments delivered by Bank of England Deputy Governor Clare Lombardelli, who had said conditions for persistent inflation in Britain are crystallizing.

AUD/USD struck an eight-month low with RSIs indicating downward momentum.

USD/JPY gains left it eyeing the 159 level, with expectations that 160 could be next.

The S&P 500 was trading down 0.64% in the New York afternoon as the increased US rate-hike expectations hurt risk appetite.

WTI fell 0.96% and Brent weakened another 1.17%, adding to recent losses.

Copper was down 1.42%, gold slid 2.68% and silver skidded 3.85% lower.

Heading toward the close: EUR/USD-0.53%, USD/JPY +0.57%, GBP/USD -0.76%, AUD/USD -0.93%, DXY +0.6%, EUR/JPY -0.03%, GBP/JPY -0.16%, AUD/JPY -0.37%.(Burton Frierson)

MUFG Research on EUR positioning.

"The recent unfavourable combination of higher energy prices and government borrowing costs particularly in France has reinforced euro selling pressure. The release of the latest IMM positioning report at the end of last week revealed leveraged funds are heavily short the euro," MUFG notes.

"Short euro positions have increased sharply since mid-September and have hit their highest level since the start of the COVID shock in early 2020. It leaves the euro vulnerable to a short squeeze in the near-term if the investor concerns over the scale of the energy shock continue to fade," MUFG adds,

MUFG targes EUR/USD at 1.12 by year-end.

• USD/JPY was higher on the CPI beat

• Core was 0.3% vs 0.2% f/c, the trigger Waller flagged for a possible 50bp December hike

• Markets now price a 12% probability of a 50bp hike

• Spot hit a fresh monthly high at 158.85, nearing range tops at 158.95-159.03

• A position squeeze in US fixed income sees the 2-year yield rise 20bps, the most since April 2025

• 159 is key. A clean break opens 160 quickly, while a hold keeps the consolidation intact
USDJPY daily

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

ANZ Research discusses USD/JPY outlook and targets.

"USD/JPY has traded broadly in a 157–159 range in the last few weeks, with some marginal falls towards 156. The BoJ's October hold was hawkish with board member Hajime Takata’s dissent in favour of a hike. The Board's first acknowledgement that underlying inflation is "generally consistent" with 2% mattered more than the decision itself. Governor Ueda's refusal to ‘wait and see’, stressing decisions are taken "at every meeting, including the next one", alongside a faster ETF sell-down, keeps the December decision live in our view, though markets are only reflecting a 50% probability of a hike," ANZ notes.

"We expect hikes in December and March, taking the policy rate to 1.75%. The risk is that those hikes move out to January. Smaller firms are deferring capital expenditure, making December’s Tankan inflation expectations pivotal. Yet the BoJ's forecasts imply a prolonged overshoot, weakening the case for an extended pause," ANZ adds.

ANZ targets USD/JPY at 156 by year-end and 154 in Q1 of 2027.

(adds space in 6th bullet)

• Cable extends south to 1.3375 as risk of 50 bps Fed hike on Dec 9 buoys USD

• Half-point hike risk prompted by hotter than expected US October CPI data

• 1.3375 is intra-day low. 1.3418 was low before the US CPI data release

• Bids may emerge around 1.3350 (Monday low) if GBP/USD falls further

• 1.3343 was one-week low last Friday (after dollar rose on NFP beat)

• BoE's Lombardelli sees risk that persistent inflation will crystallise

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

Goldman Sachs flags a seasonal pattern for AUD/NZD to trend lower in November.

"There are idiosyncratic reasons for peripheral USDs to come under pressure. The NZ elections trimmed the left tail on NZD (incumbents will continue to form the base of a coalition, no dual mandate)," GS notes.

"But the seasonality for AUDNZD-lower in November already has a headstart with the cross -1.6% on the month, and that’s with reverberations of the end-Oct mis-step by the RBNZ (held vs. +24bps priced-in) and weaker NZ employment data last week," GS adds.

Goldman Sachs targets AUD/USD at 0.7200, NZD/USD at 0.6000, and AUD/NZD at 1.2000 by year-end.

CIBC Research reviews the October CPI report.

"Both headline and core CPI came in hotter than consensus expectation for October, solidifying the odds of a December rate hike. Total CPI grew 0.4% m/m, higher than the 0.3% expected by the consensus. Gasoline explained almost all of the slowdown in the monthly pace of headline inflation. Food inflation saw a notable pick up this month as its monthly pace increased from 0% to 0.5% in October, both food at home and restaurants accelerated. Core CPI grew 0.3% m/m, higher than the consensus expectation of 0.2%. Core goods increased 0.2% m/m, a touch below last month’s pace, the deceleration is partly due to a monthly contraction in used cars and trucks after the solid growth last month. On core services, shelter increased 0.3%, slightly slower than September due to slower growth in hotels. Transportation services posted a solid growth of 0.8%, the highest since January, driven by motor vehicles related services such as motor vehicle insurance and fees," CIBC notes.

"With both headline and core CPI firmer than expected and the upside surprise was somewhat broad-based, we think that will convince the FOMC to deliver a 25 bps hike in its upcoming December meeting," CIBC adds.

• AUD/USD hit 0.6930 overnight, sellers emerged then the pair turned lower

• Broad-based USD buying, firm US yields weighed on the pair

• Drops in gold, silver and copper also helped to weigh down AUD/USD

• 0.6909 traded in Europe, NY opened nearby, pair was down -0.21% early NY

• AUD/USD remains within Friday's daily range, suggests bounce is corrective

• Falling daily, monthly RSIs, hold below 10- & 21-DMAs add to bear signals

• US October CPI looms, if above estimate USD, US yields could rally
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• Gold down from $4146/oz to $4073/oz on Tuesday

• The 55-DMA set to cross below 100-DMA - bearish

• US CPI expected 0.2% in Oct vs 0.3% mm Sep

• Range of 68 forecasts in Reuters poll is 0.1%-0.3%

• Targets for a drop: $3823, $3726, $3628, $3489, $3312

• US bond buy signal may spark short squeeze, hurt USD

•
gold sell signal and targets

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

Nov 10 (Reuters) - AUD/USD may be setting up a bullish reversal after a prolonged slide, with a harami pattern taking shape.

A potential bullish harami candlestick pattern might be forming on the daily chart after a sustained AUD/USD downtrend. A large black (bearish) candle pushed price lower, and a smaller white (bullish) candle followed, opening and closing within that large body. This suggests selling pressure may be fading.

A daily close above the 0.6942 high of the large black candle would support a reversal, as would a break and close above the 0.6945 Fibonacci level, a 23.6% retrace of the 0.7238 to 0.6855 (September to November) drop. That would unmask the 0.7001 Fibonacci level, 38.2% of the same 0.7238 to 0.6855 fall.

AUD/USD held on to gains on Tuesday as a plunge in oil prices fuelled a rally in risk assets, although a string of weak survey results painted a bleak outlook of the Australian open and export-heavy economy. A break below the recent 0.6855 low would invalidate the harami pattern.
Daily Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.3430 intra-day low as USD rises on hawkish steer from Waller

• Fed's Waller plans to support at least a quarter-point rate rise in December

• Waller: half-point hike may be needed on Dec 9 if Oct core CPI 0.3% or higher

• US Oct CPI data is due at 1330 GMT; core CPI is forecast up 0.2% MM

• 1.3459 was early London high for GBP/USD, courtesy of lower oil prices

• UK is a net energy importer. 1.3463 was Friday high (1.3350 was Monday low)

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Oil has plunged almost $28 per barrel supporting EUR/USD

• Unlikely oil factored by traders due to speed of drop

• Euro short grew to $22 billion last week, biggest since 2015

• The plunge in oil prices should fuel short covering

• A squeeze (unwind of distressed bets) less certain

• Over 1.1336 - 38.2% Aug-Oct drop would heighten risk squeeze

• The yuan may be at heart of future FX moves

•
EURUSD

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable rises to 1.3456 as pound benefits from lower oil prices, Asian equity gains

• Nikkei up 2.87%; Kospi up 4.39% (GBP is risk-sensitive; UK is a net energy importer)

• 1.3456 is high since Friday (1.3463 was high that day). 1.3350 was Monday low

• US Oct CPI data due at 1330 GMT: 0.3% MM forecast; core CPI f/c 0.2% MM

• BoE's Lombardelli does not rule out December rate hike, she tells the Guardian

• US aircraft evacuated from second UK base due to Iran threat, WSJ reports

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX option strikes expire at 10am New York/15:00 GMT on Tuesday November 10

• EUR/USD: 1.1160-70 (1.8BLN), 1.1200-05 (1.2BLN), 1.1225 (940M), 1.1240-50 (2.6BLN), 1.1300-10 (813M)

• USD/CHF: 0.8175-80 (170M), 0.8205 (160M). EUR/CHF: 0.9185 (184M)

• GBP/USD: 1.3430 (267M), 1.3485 (270M), 1.3495-1.3500 (317M)

• AUD/USD: 0.6800 (867M), 0.6900 (450M), 0.6925 (679M).

NZD/USD: 0.5620-25 (350M), 0.5675 (391M)

• AUD/NZD: 1.2200 (310M), 1.2300 (355M), 1.2400 (325M). USD/CAD: 1.4125 (432M)

• USD/JPY: 157.00 (281M), 157.35 (200M), 157.50 (286M), 157.70 (500M), 158.00 (235M), 158.35 (300M)

• EUR/JPY: 177.95-178.05 (286M)

• FX options wrap - Cautious calm, CPI risks, EUR/USD congestion (Richard Pace is a Reuters market analyst. The views expressed are his own)

• Shares of Solstice Minerals rise as much as 9.8% to A$2.195, their highest level since October 16

• The mineral explorer says drilling at Nanadie Copper-Gold Project, loctaed in Western Australia, returned high-grade copper-gold results, supporting resource growth potential

• Stock up 424.4%, YTD, including moves in current session

(Reporting by Swetha Lakshmi in Bengaluru)

• GBP/USD unchanged in Asia after closing 0.7% higher on Monday

• Boosted by declining oil prices, surging stocks , waning AI concerns

• USD crude -0.7% in Asia as Trump downplays prospect of escalation with Iran

• Asia stocks rally as investors reassess prospects for AI trade, support GBP

• US CPI due later Tuesday, key for Fed rate expectations

• BoE Chief Economist Huw Pill, Dep Gov Clare Lombardelli due to speak on Tue

• UK Q3 and Sep GDP, industrial and manufacturing output, trade data due Thu

• Support 1.3400-10, 1.3380, 1.3350, resistance 1.3465-70, 1.3500-05

• Monday range 1.3350-1.34435, Asia 1.3434-1.3447
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• AUD/USD flat Tue as USD remains soft in lead up to U.S. inflation release

• U.S. Oct core CPI due Tue, Reuters poll consensus +0.2% m/m/ +2.8% y/y

• Futures pricing currently implies 83.8% chance of Fed rate hike on Dec 9

• WTI -0.7% to $86.25 a barrel as Trump continues to flag restraint on Iran

• Westpac AU Nov consumer sentiment hits a 4-year low at -2.7% (prior -4.7%)

• NAB AU Oct business confidence falls to 6-year low of -15 (prior -14 (rev.))

• AUD 0.6835-55 support zone critical, break would send pair sharply lower

• Range Asia 0.6914-29 support 0.6855 0.6835 0.6662, resistance 0.7140 0.7282
AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.1% Tue in Asia but remains elevated amid broader USD weakness

• Westpac AU Nov consumer sentiment hits a 4-year low at -2.7% (prior -4.7%)

• NAB AU Oct business confidence falls to 6-year low of -15 (prior -13)

• WTI -0.5% to $86.42 a barrel as Trump continues to flag restraint on Iran

• Futures pricing now implies 83.8% probability of Fed rate hike on Dec 9

• Range Asia 0.6917-29 support 0.6835 0.6662, resistance 0.7140 0.7282
AUD Daily 21/55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• From trading on 158, USD/JPY back to trading around 158.00

• Asia 157.91-158.03 EBS so far, off a notch on broadly easing USD

• Lower crude oil prices, mostly steady US yields, Wall St rally/risk on too

• Also dovish Fed Barkin-speak, December Fed hike not in bag?

• USD/JPY back into its 157.17-158.42 daily Ichimoku cloud from around top

• Spot also back into 157.93-158.26 hourly cloud after brief move below

• Resistance from 158.12 descending 100-HMA, 200-HMA in area at 157.99

• On options front, $1.4 bln in expiries today between 157.00-70

• On 158, total $1.3 bln in expiries, 159.00-50 $1.1 bln, at 156.50 $1.5 bln

• Japanese exporter sales presumed on rallies, importers at Tokyo fix

• JGB-US Treasury rate differentials tad wider in 2s, steady in 10s

• Related comments , , ,

• And , , , also

• US markets , , ,

• On dovish Fed Barkin-speak ,

• On NY Fed survey , for more click on [FXBUZ]

USD/JPY:


USD/JPY nearby option expiries this week:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD +1.6% wtd as global risk sentiment improves post-NZ election

• NZ Prime Minister Luxon on target to retain power with reduced majority

• Preliminary election result reduces risk of RBNZ reverting to dual mandate

• NZ Oct electronic card retail sales due Thur (prior -0.4% m/m, +0.9% y/y)

• WTI -4.9% to $86.38 a barrel after Trump flagged restraint on Iran

• USD index -0.6%, while Nasdaq jumped 2.7% despite Nvidia dropping 4.6%

• Futures pricing now implies 83.8% probability of Fed rate hike on Dec 9

• Range NZ 0.56211-375, support 0.5485, resistance 0.5710 0.5995 0.6012
DXY Daily 55/100/200-DMA


NZD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

MUFG Research discusses the USD outlook ahead of the October CPI print, due on Tuesday.

"Market participants and the Fed will be watching closely for evidence of spillover effects from higher energy prices in the latest US inflation data released this week. Recent core CPI readings have surprised to the upside over the last couple of months putting pressure on the Fed to tighten policy.

However, consensus expectations are looking for a softer core CPI print of 0.2%M/M in October. A reading that would help put a dampener on the US dollar’s upward momentum in the near-term," MUFG notes.

"The US dollar appears to be running ahead of short-term yield spreads indicating that a hawkish surprise maybe required to maintain US dollar strength," MUFG adds.

MUFG targets EUR/USD at 1.12 and USD/JPY at 155 by year-end.

• AUD/USD +1.1% from Mon 0.68561 low amid broad risk sentiment uplift

• Brent crude -5.9% to $92.49 a barrel after Trump flagged restraint on Iran

• USD index -0.6%, while Nasdaq jumped 3.1% even with Nvidia slumping 4.6%

• Futures pricing implies 81.0% probability of Fed rate hike on Dec 9

• AU Westpac consumer sentiment and NAB business confidence surveys due Tue

• Overnight range 0.6880-0.6931 support 0.6835 0.6662, resistance 0.7140
AUD Daily 21/55/100-DMA


DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY price action tepid despite the rebound in risk assets. Daily range = 157.85-158.52

• The 200-DMA (158.68) continues to cap. Pullbacks also remain limited at range lows

• US CPI is the next data risk, but the impact may be small with a Fed hike largely priced in 0#USDIRPR

• Softer oil and UST yields favour JPY, but the bid is muted

• In the short-run, there is little to suggest a meaningful breakout of the 156-159 range

• n the short run, there is little to suggest a meaningful breakout of the 156-159 range
USDJPY daily chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

AZN Research sees a scope for AUD/NZD to extend its upside towards 1.30 over the coming weeks.

"The RBNZ’s late-October decision to hold the OCR at 2.75% wrong-footed a market pricing a greater than 80% probability of a 25bp hike. AUD/NZD briefly traded above 1.26 in the aftermath, its highest since early 2013. The cross has since retraced to around 1.24, in line with our year-end forecast.

Our central case is that the pair remains around 1.24, but upside risks are material," ANZ notes.

"Three channels could challenge our view and bring 1.30 into focus: persistent growth divergence, a dovish repricing of the RBNZ outlook and an energy-driven terms-of-trade shock," ANZ adds.