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The Greenback tried (and failed) to regain some of its pips despite a relatively good set of economic reports from Uncle Sam.

  • U.S. CPI inches up by 0.1% as expected vs. 0.5% previous
  • U.S. core CPI up by 0.2% as expected vs. 0.1% growth in September
  • U.S. retail sales up by 0.2% vs. no growth expected, 1.9% uptick in September
  • U.S. core retail sales up by 0.1% vs. 0.2% expected, 1.2% previous
  • U.S. NY manufacturing index drops from 30.2 to 19.4 in November
  • U.S. crude oil inventories shows 1.9M-barrel increase vs. 2.1M-barrel draw expected
  • U.K.’s CB leading index slips by another 0.2% in September

Major Events/Reports

U.S. CPI and retail sales reports

Consumer prices in the world’s largest economy inched 0.1% higher in October, which is lower than September’s 0.5% increase but is in line with analysts’ expectations. This translates to an annualized gain of 2.0%, a tad lower than September’s 2.2% reading.

Meanwhile, core consumer prices shot up by 0.2% against September’s 0.1% growth. Year-on-year, prices increased by 1.8% when analysts had only priced in a 1.7% improvement.

The retail sales report provided a bit more encouragement with its 0.2% growth when analysts were only expecting a 0.1% uptick.

Core retail sales also rose by 0.1% following an upwardly revised 1.2% growth in September. Meanwhile, a so-called “control” group sales – which excludes food services, auto dealers, building materials stores and gasoline stations – grew by 0.3% after an upwardly revised 0.5% uptick in September.

A closer look tells us that 9 out of 13 major retail categories showed monthly increases.

Overall, the reports didn’t really have an impact on expectations of a Fed rate hike in December. CME’s closely-watched poll put a December rate hike firmly above 90% after the reports were printed.

Oil prices slip (again)

Data from the U.S. Energy Information Administration (EIA) showed that crude oil inventories in the U.S. rose by another 1.9 million barrels in the week ending November 10. For reference, analysts had estimated a decline of 2.2 million barrels in the same time period.

Total U.S. crude oil inventories stood at 459 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.

The report came too close to American Petroleum Institute also revealing a supply gain of about 6.5 million barrels AND the International Energy Agency (IEA) revising its estimates to reflect lower demand forecasts for 2017 and 2018.

Not surprisingly, oil prices took more hits with Brent crude oil falling by another 0.58% to $61.85 while U.S. crude oil prices dropped by another 0.75% to $55.28. Yikes!

Cautious trading ahead of U.S. tax vote

The U.S. markets failed to trade in a single direction despite the release of top-tier reports during the session. Some analysts point to lingering tax plan doubts as reasons for traders staying away from higher-yielding bets.

  • Dow 30 index is down 135.07 points to 23,274.40 (-0.58%)
  • S&P 500 index is down 13.91 points to 2,564.96 (-0.54%)
  • Nasdaq is down 30.85 points to 6,707.03 (-0.46%)

Even U.S. bond yields felt the pressure:

  • 10-year yield is down to 2.329% (-2.18%)
  • 2-year yield is down to 1.688% (-0.21%)

Major Market Mover(s):

USD

The Greenback shot higher against its major counterparts, but an improvement in market sentiment towards the end of the session erased most of the headway it made.

USD/CHF shot up to .9913 before settling down to .9883, USD/JPY popped up to 113.20 before slipping back to 112.83, while EUR/USD lost 45 pips (-0.38%) throughout the session.

Watch Out For:

  • 12:00 am GMT: Australia’s MI inflation expectations (4.3% previous)
  • 12:30 am GMT: Australia’s jobs numbers. Make sure you read Forex Gump’s trading guide!