Posted Oct 30, 23:17

Inflation Could be the Dollar’s Worst Enemy

GDP (Annualized) (Q3) [P] 3.5%
GDP Price Index (Q3) [P] 1.3%
Tokyo CPI (OCT) (y/y) Oct 30 23:30
Tokyo CPI ex Food, Energy (OCT) (y/y) Oct 30 23:30
Tokyo CPI ex Fresh Food (OCT) (y/y) Oct 30 23:30
National CPI (SEP) (y/y) Oct 30 23:30
National CPI Ex Food, Energy (SEP) (y/y) Oct 30 23:30
National CPI Ex-Fresh Food (SEP) (y/y) Oct 30 23:30
More Events...
9 hours ago: 

Economists were quick to poke holes in a strong US GDP report but it's the inflation picture that should be in the spotlight. The kiwi was the top performer Thursday as it defied RBNZ jawboning while the yen lagged. Up next it's the Japanese CPI report and the BOJ decision.  In the Premium trades, both  GBPUSD shorts were closed prior to reaching their final targets, attaining a combined  profit of at least 210 pips.  AUDUSD and NZDJPY shorts as well as longs in USDCHF remain in progress. US GDP rose at a 3.5% pace in the preliminary Q3 report, beating the 3.0% consensus. The dollar jumped 30 pips across the board but the gains were almost immediately erased and the dollar continued to fall throughout the day.

What happened? Most economists pointed to the large boost in GDP because of US defense spending. That added about 0.6 pp. Others pointed to trade but that could continue to be a boost because of rising oil production. Consumer spending was also slower at +1.8% but it's a challenge to separate the effects of lower gasoline prices at the moment.

PREMIUM INSIGHTS Update: Oct 30, 19:44
5 Reasons for the USD Rally (and Why it May Continue) Oct 30, 2014 0:08: 

The US dollar surged around 90 pips right across the board after the Federal Reserve statement. We look at what exactly was behind the buying and what it means for the US dollar next.  Premium subscribers emailed us about GBPUSD & AUDUSD and NZDJPY shorts as well as longs in USDCHF have seen their gains expand, following last night's Premium note calling for sticking with GBPUSD shorts, which  currently net more than 200 pips. 1.  A 'significant' change


Dollar Soars as Fed Shuts QE3 Door Oct 29, 2014 21:37: 

As the Fed slammed the door on QE3, the upgraded view on labour markets and diminishing worries of disinflation boosted the greenback, while the maintaining of “considerable time” guidance on low interest rates avoided any bringing forward of rate hike expectations, thus, weighing on bond yields and helping stocks pare their earlier pullback. There was a reason why yesterday we re-confirmed our Premium shorts in GBPUSD, AUDUSD, NZDJPY and longs in USDCHF. Full analysis here