The US dollar index is set to finish a second consecutive week in the red after a remarkable 11-week winning streak. This index, which measures the value of the dollar against a basket of six other major currencies, ended its impressive run last week with a slight 0.2% decline.
If the upward trend had continued for two more weeks, it would have marked the dollar's longest winning streak in a week-by-week comparison since record-keeping began in 1985. Currently, the dollar index has experienced a decrease of about 0.4% over the past five trading days.
Thanks to a recent drop in the dollar's value and bond yields, both gold (XAUUSD) and silver (XAGUSD) are continuing to gain ground. Recently sparked geopolitical concerns have further boosted these precious metals, as demonstrated by a price surge.
Until recently, the Federal Reserve stood out as one of the most hawkish central banks, while many other central banks had already started to ease their hawkish policies. However, there has been a noticeable shift toward a more dovish stance in the Federal Open Market Committee's (FOMC) recent statements, indicating that the rate-hiking cycle may be coming to an end. The reevaluation of the Fed's interest rate outlook, which followed its last meeting in September, has likely been completed. This may explain why the dollar did not respond positively to the better-than-expected Producer Price Index (PPI) data.
Today's economic highlight is the release of US inflation data. The US Consumer Price Index (CPI) report is not likely to alter the trajectory of inflation.
The CPI increased by 3.7% in the 12 months ending in September, slightly exceeding economists' forecasts. Consensus estimates had predicted an annual inflation rate of 3.6%, which would have represented a slight decrease from the 3.7% gain seen in August.
On a monthly basis, inflation rose by 0.4%, surpassing the expected 0.3% increase. The primary contributors to this monthly increase were the shelter index, reflecting rental leases and the implicit rental value of owner-occupied properties, along with increases in gasoline and fuel oil prices.
In contrast, food price inflation is at its lowest level since March 2021, matching the overall inflation rate of 3.7%. This is the first time since early 2022 that food prices have not outpaced the general inflation rate, according to CPI data.
When excluding the volatile categories of gas and food, the core CPI has now cooled for the sixth consecutive month, with an annual increase of 4.1% and a monthly gain of 0.3%.
