U.S. Treasury Yields Fall on Signs of Weaker Inflation


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The dollar index which measures the greenback against a basket of major currencies retreated from a two-month high of 96.86 to settle lower at 96.32. DXY and the U.S Treasury yields were negatively affected by the economic data released on Friday. Despite the fact that the U.S. economy grew at a rate of 3.5% versus an expectation of 3.3%, the Personal Consumption Expenditure (PCE) which is the Fed's preferred inflation gauge increased 1.6% last quarter versus an expectation of 2.0%. A slowdown in inflation figures could challenge the Fed in tightening the monetary policy furthermore. The U.S. 10-year treasury yields fell to 3.056%, the lowest since early October. The USDJPY traded at a six-week low of 111.38.


The Euro rebounded from a ten-week low against the United States dollar following the softer U.S. data. The Common currency found support after the S&P rating agency left Italy's credit rating unchanged at BBB but lowered its outlook to negative from stable. The EURUSD is trading near the $1.14 level, and the EURJPY is trading near 127.60.


The sterling logged its biggest weekly loss against the United States dollar since February, weighed down by the Brexit woes. Britain and the European Union couldn't reach a Brexit deal yet. However, the GBPUSD bounced-off a nine-week low of $1.2777 to finish the week at $1.2825 as the dollar weakened.


Gold prices rose to a high of $1243, the highest since mid-July, on weaker U.S. data. However, the precious metal trimmed gains and settled slightly above the $1230 level. The silver ounce remain caught in a tight range between $14.45 and $14.90


Oil prices closed higher on Friday, to erase part of the week's losses. Oil prices were under pressure as the Kingdom of Saudi Arabia pledged to keep the markets well supplied. Market participants will be waiting for the effects of U.S. sanctions on Iran's oil exports that will take effect on the fourth of November. The West Texas Intermediate crude future lost 0.7% to $67.21, and the Brent future fell 0.5% to $77.17.

Major Economic Events

GMT Country Event Expectation Previous
12:30 UK Autumn Budget    
12:30 US Core PCE Price Index (MoM) (Sep) 0.1% 0.0%
12:30 US Core PCE Price Index (YoY) (Sep) 2.0% 2.0%


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