US 5-year inflation expectations drop to three-week low ahead of US CPI

  • November 10, 2022

The market’s expectations of softer US inflation seem to weigh on the US Dollar Index (DXY) during early Thursday. In doing so, the DXY retreats towards the seven-week low while fading the previous day’s bounce, retreating to 110.30 by the press time.

That said, the inflation precursors, as per the 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, dropped to the lowest levels since October 20 in its latest print published at the end of Wednesday’s North American session, to 2.53% versus 2.61% prior.

A bit broader inflation expectations, however, remained a bit less weak as the 10-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data slide to 2.42% while refreshing the weekly low.

It should be noted that the market forecasts suggest an 8.0% YoY print for the US Consumer Price Index for October, which in turn could exert downside pressure on the DXY considering the latest talks surrounding the easy rate hikes in December.

Also read: US Dollar Index pares recent gains above 110.00 ahead of US inflation