Today’s U.S. Core CPI was better than expected by one-tenth for both YoY at 1.8% and MoM at 0.3%. But guess what, the dollar lost more than 0.5% on the session and 1% from its swing high.
The euro has been on a path higher since yesterday morning and we believe much of this is technical. Where the dollar was vastly oversold, the euro was overbought, and the trade was due to come back in.
The euro put in its worst session since October as Federal Reserve Presidents Kaplan and Dudley brushed off recent equity market volatility and implied the Fed is on track to hike at its next meeting.
The forex markets were relatively calm today. All eyes were on Wall Street as investors tried to gauge the appetite for risk as the indices bounced around key levels after their significant falls the day before.
Tradable events this week: S&P, forex & Treasury
Today was a monster session for the euro as U.S Treasury Secretary Mnuchin took the dollar to the woodshed to get hammered.
There are no two ways about it: 2017 was a brutal year for U.S. dollar bulls. By mid-December, the world’s reserve currency had fallen against every one of its major rivals on the year, losing a staggering 12% against the euro and nearly 9% versus the British pound (see “Dollar daze,” below).
This is a big week for the euro with the ECB policy meeting on Thursday.
The Euro retreated sharply from session highs this afternoon to trade back to its Sunday night open.
The battered dollar stabilized against its peers on Wednesday as investors pondered the possibility of a U.S. Government shutdown on Friday.