Dollar steadies as hot US CPI and Waller lift December Fed hike bets

US inflation came in hotter than expected in October, and Treasury yields spiked on the news. The dollar steadied after earlier losses as the data reinforced bets on a Federal Reserve rate hike in December, according to Investing.com.

Our last update set the scene with weak Australian surveys and a surge in China imports. The CPI test it pointed to has now been passed, and the result leaned hawkish.

US CPI beats on headline and core

investingLive reports the key numbers:

• Headline CPI rose 0.4% month on month, against 0.3% expected and 0.6% prior.
• Core CPI rose 0.3%, against 0.2% expected. The unrounded figure was 0.297%, matching the prior 0.3% pace.
• So-called supercore was roughly 0.4% month on month.
• Core goods rose 0.2%, down from 0.3% the month before.
• Real weekly earnings were flat at 0.0%, after a revised -0.4% prior.

The beat ran against the Wall Street view. Before the release, an investingLive preview said the street expected a softer October reading, but argued that even a cooler print might not change the Fed's thinking before its December meeting.

The bond market reacted quickly. Investing.com reports that Treasury yields spiked as hot CPI combined with a resilient labour market. That follows last week's strong payrolls report.

The move also spread beyond currencies. Our sister site covers how bitcoin fell after the hot CPI print cemented December Fed hike bets.

Waller raises the stakes for December

The CPI data landed on top of hawkish Fed talk. Governor Christopher Waller floated the case for a 50 basis point hike in December, according to the investingLive European news wrap. The same wrap noted that crude oil lost ground on renewed US-Iran deal hopes, though it said a concrete breakthrough was not yet in sight.

Sterling felt the pressure earlier in the day. Investing.com reports that the pound slipped as the dollar steadied on Fed tightening bets.

The fixings as a reference point

The ECB reference rates of 10 November showed a softer dollar against most majors compared with the 9 November fixings. These are official daily fixings, not live quotes.

• EUR/USD fixed at 1.1214, up 0.19%.
• GBP/USD fixed at 1.3423, up 0.05%.
• NZD/USD fixed at 0.5628, up 0.27%.
• AUD/USD fixed at 0.6904, up 0.14%, but still 1.15% lower than on 3 November.
• USD/JPY fixed at 158.18, up 0.15%.
• USD/CAD fixed at 1.4136, up 0.23% and 1.15% higher than on 3 November.
• USD/MXN fixed at 18.554, down 0.32%.

Traders can follow the euro on the EUR/USD chart and the broader dollar on the DXY chart.

Other central bank news

The ECB published two speeches on 10 November. Chief economist Philip R. Lane spoke on monetary policy communication, and Piero Cipollone spoke on cash and the digital euro. The Bank of England released an exchange of letters between the Governor and the Chancellor on the Asset Purchase Facility.

What to watch next

• Veterans Day. Wednesday is a partial US market holiday. investingLive warns that thinner participation could cause the CPI reaction to fade.
• Treasury auctions. A heavy auction week remains in focus after the yield spike, as Investing.com flagged on Monday.
• The Fed in December. Waller's 50 basis point comment puts the size of any hike, not only its timing, in play.
• US-Iran talks. investingLive said renewed deal hopes weighed on oil, without a concrete breakthrough.
• Xi-Trump meeting. investingLive reports that China's trade surplus topped $1 trillion, putting trade at the centre of next week's meeting.