Wednesday, 17 Nov 2010

Dollar Falls on Consumer Prices Data

The US dollar fell against most of its major counterparts on Wednesday after a government report showed U.S. consumer prices rose less than expected in October and the increase in the year-on-year core rate was the smallest on record, seen as further supporting the Federal Reserve's decision to ease monetary policy. The USD is currently trading lower against the CHF by nearly 60 pips at 0.9905. It is also trading lower against the EUR and JPY.

A leading indicator released today was U.S. CPI. The Consumer Price Index rose 0.2% last month after edging up 0.1% in September. Excluding food and energy costs, prices were flat for a third straight month and the increase from a year ago of 0.6 % was the smallest since records started in 1957. Weak inflation as the economy recovers moderately from the worst recession since the 1930s lifted prices for U.S. Treasury debt, while the dollar fell against the euro and yen.

Tomorrow, forex traders cannot afford to overlook, a batch of data is expected from the leading economies. Both the British Retail Sales and U.S Unemployment Claims will be released at 9:30 GMT and 13:30 GMT respectively, promising an extremely volatile trading day. Traders should take advantage of this unique opportunity and use the volatile market in order to capitalize profits.