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USD Bounces Around on Inflation Data; Oil Prices Also Have a Bumpy Ride

Published March 13, 2018
  • The US dollar moved higher in overnight trading as market participants waited optimistically for CPI data to be released, perhaps hoping a strong read would accelerate the timing and the quantum of interest rate hikes by the US Fed.
  • US CPI data came in as expected at 0.20% (slightly lower than forecast, based on non rounded data at 0.16%), causing a selloff in USD. Trump firing Secretary of State Rex Tillerson likely also played a part in the greenback’s weakness.
  • The tepid CPI print has likely also dampened expectations for 4 rate hikes in 2018, or at the very least did nothing to support those hopes. That said, the FOMC meets on March 21, with markets currently pricing in ~98% likelihood of a rate increase.
  • Oil prices have also been on a bit of a roller coaster, starting with yesterday’s statement by the US Energy Information Administration that US shale production would hit a new record high in April, causing crude prices to drop nearly 1%.
  • Oil prices have since reversed, due to a supply disruption in Libya after fighting caused 2 of the country’s biggest ports, Es Sider and Ras Lanuf, to shut down. WTI crude is up 0.73% to $61.81 with Brent crude up 0.75% to $65.44 at the time of writing.