Forex Today: US Dollar erases CPI-inspired gains as bond yields slump

The US dollar came under renewed selling pressure on Thursday, October 15, surrendering the gains it had posted immediately after this week's hotter-than-expected US inflation readings, as Treasury bond yields declined sharply.

According to FXStreet's daily foreign-exchange wrap, the greenback weakened against most major peers during the European session. The dollar was down roughly 0.5% against the euro, about 0.4% against the pound sterling, around 0.2% against the Japanese yen and close to 0.6% against the Swiss franc, while holding modest gains of about 0.45% versus the Australian dollar.

The move marked a reversal of Wednesday's price action. The September Consumer Price Index report showed annual US consumer inflation accelerating to 3.7%, above economists' forecasts and up from the previous month's 3.4% reading. That print initially lifted the dollar and Treasury yields, as it revived market expectations that the Federal Reserve could raise interest rates again at its upcoming policy meeting rather than ease. A separate producer price reading, reported at 6.3% on an annual basis, added to the picture of firmer pipeline inflation.

The subsequent slide in long-end Treasury yields, however, removed much of the support the dollar had drawn from the data. Falling nominal yields reduce the yield advantage that US assets offer over other major markets, a relationship that often weighs on the currency and tends to relieve pressure on non-yielding assets such as bullion.

In the Japanese yen, USD/JPY was quoted down about 0.3% on Thursday at around 157.85. Commentary cited by FXStreet pointed to a relatively hawkish Bank of Japan stance as a source of support for the currency. Separately, former BoJ board member Takahide Kiuchi ruled out a reflationary policy approach and warned against excessive foreign-exchange volatility; FXStreet reported that the market showed little immediate reaction to those remarks.

Gold moved in the opposite direction to the dollar. After a sharp selloff on Wednesday in the wake of the CPI release, spot gold rebounded by more than 1% on Thursday, climbing back above $4,150 an ounce. Spot prices were reported around $4,156 in earlier Thursday trading, a gain of roughly 1.3%, while December futures rose about 1.7% to approximately $4,178.50.

Yahoo Finance reported that December gold futures opened at $4,128.30 per troy ounce on Thursday, down 0.5% from Wednesday's close and the lowest opening level of the week, before recovering to about $4,175.50 by 6:57 a.m. ET. Fortune's price tracker put gold at $4,147 per ounce as of 9:10 a.m. ET, a $52 increase from the same hour the previous day but about $40 lower than a year earlier. Yahoo Finance noted that the year-on-year change in gold prices had turned negative for the first time in at least a year and a half.

In India, physical gold rates fell for a fourth consecutive session on October 15 even as MCX gold futures rose about 1%, illustrating how local physical premiums and currency effects can diverge from international spot moves.

Attention now turns to further US data and scheduled remarks from Federal Reserve officials, which market participants are watching for signals on the policy path ahead of the central bank's next meeting. Price levels cited here reflect intraday quotes at the times reported by the sources and change continuously.

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This is a news summary for general information only — not financial advice, and nothing here is a recommendation to buy or sell any currency or metal. Exchange rates and gold prices can move sharply around data releases and central-bank decisions, and trading them carries a real risk of loss, which leverage magnifies. Always verify against the original source and do your own research before making a financial decision.