The Euro is attacking. Overview for 14.10.2021

EURUSD rose after the US inflation data.

The major currency pair finally found a reason for recovering. The current quote for the instrument is 1.1610.

Yesterday, the US published the first of the two important reports planned for this week, the Consumer Price Index. The data stopped the rally in the US 10-yar bond yield, which immediately put pressure on the “greenback”.

The US inflation showed 0.4% m/m in September after being 0.3% m/m the month before and against the expected reading of 0.3% m/m. On YoY, the indicator showed 5.4%, the highest reading over the last several years. 

Inflation concerns are now rather serious. They may be escalated by discussion of the US national debt or additional money printing by the US Fed: of course, the money will find its way into the economy but it’s not a good signal for the “greenback” and the financial system. 

Strong inflation becomes a serious reason why the Fed may reduce its stimulus programme in November. At the same time, it scares market players. 

Now investors are waiting for the second US report, Retail Sales, which is expected to show -0.3% m/m after being 0.7% m/m in August. This data will also be important to the Fed for making a stimulus decision.