US core CPI up only 0.1 percent in October; dollar strengthens

Core consumer inflation was down in October, rising just 0.1 percent for a drop in the annual rate to 2.7 percent, down from 2.9 percent in September. Analysts said that while inflation is still higher than it should be, but that recent statements of concern by Federal Reserve officials seemed to be exaggerated considering that core inflation was now on the way down.

After the release of the new CPI data, the US dollar dropped briefly versus major currencies, but by mid-afternoon in New York, the greenback had added 0.1 percent against both the euro and the yen, to $1.2810 versus the euro and ¥118.10 against the yen. The dollar did not fare so well against some other currencies, however, as the South African rand added 0.6 percent to the dollar to R7.1600, while the Turkish lira gained 0.8 percent versus the greenback, to TL1.4335.

Meanwhile, the euro was not affected by yet another statement out of France, this time from French President Jacques Chirac, that members of the eurozone should have more input into monetary policy as set by the European Central Bank. The non-reaction to Mr. Chirac’s statement, added to the decision by the Bank of Japan to keep interest rates at their present level there, combined to send the yen 0.1 percent lower in relation to the euro, to ¥151.30.

Sterling was slightly higher versus both the US dollar and the euro on new data showing retail sales in the UK up by 0.9 percent in October, well ahead of the forecast of a gain of 0.3 percent. The UK currency added 0.1 percent versus the greenback, to $1.8900 versus the greenback, while it also added 0.1 percent against the euro, to £0.6775.

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