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Hot U.S. CPI Lifts Dollar 0.36% as Gold Drops 1.35%, Bitcoin Slips

The dollar index rose 0.36% and gold futures fell 1.35% on Wednesday, Oct. 14, after U.S. inflation hit 3.7% in September, above forecasts.

By Global Terminal Staff · · 3 min read

Shiny gold bars with stamped markings stacked close together
Photo: Jingming Pan / Unsplash

Why it matters

  • U.S. consumer prices rose 0.6% in September and 3.7% from a year earlier, the Labor Department said Wednesday. Core inflation rose to 2.6%, above the 2.5% forecast cited by Trading Economics.
  • The dollar index rose 0.36% to 102.54 and the euro fell 0.40% to $1.1158, Yahoo Finance data show. Gold futures fell 1.35% to $4,121 an ounce and bitcoin lost 1.76% to about $81,630.
  • The 10-year Treasury yield jumped toward 5.32% after the report but ended at 5.19%, down 2 basis points, Treasury data show. The yen gave up its early losses and ended flat near 158.31 per dollar.

Analysis: this piece includes our interpretation of the facts reported.

The U.S. dollar rose and gold, bitcoin and stocks fell on Wednesday, Oct. 14, after September consumer inflation came in hotter than expected. The dollar index ended up 0.36% at 102.54, while gold futures fell 1.35% to $4,121 an ounce, according to Yahoo Finance data.

What did the September CPI report show?

Consumer prices rose 0.6% in September and 3.7% from a year earlier, up from 3.4% in August, the Bureau of Labor Statistics said. Gasoline jumped 9.1% and made up more than half of the monthly rise, the agency said. Core prices, which exclude food and energy, rose 0.3% for the month and 2.6% from a year earlier, up from 2.4%.

That beat expectations. Trading Economics said economists had forecast 3.6% for the annual rate, 2.5% for core and 0.2% for monthly core. The 0.6% monthly headline matched forecasts.

How did markets react to the CPI report?

The dollar strengthened and most other assets fell. The table compares late Wednesday levels with Tuesday, Oct. 13.

AssetWednesday levelChange vs. TuesdayTime basis
Dollar index (DXY)102.54+0.36%ICE futures-based index, 4:42 p.m. ET
EUR/USD$1.1158-0.40%Spot, 4:51 p.m. ET
USD/JPY158.31 yen0.00%Spot, 4:52 p.m. ET
Gold (Comex futures)$4,121.00-1.35%Late futures, 4:42 p.m. ET
Bitcoin$81,632-1.76%4:52 p.m. ET, vs. Oct. 13 close at midnight UTC
U.S. 10-year Treasury5.19%-0.02 ptTreasury par yield, close
S&P 5007,718.94-1.11%Close
Nasdaq Composite26,692.87-1.88%Close

Source: Yahoo Finance chart data; U.S. Treasury Department for the 10-year yield.

The moves came fast. In 15-minute Yahoo Finance data, the dollar index jumped from 102.20 to 102.68 in the bar that included the 8:30 a.m. ET release and peaked near 102.92 later in the morning before giving back some gains. The Nasdaq's 1.88% drop was the steepest of the three main U.S. stock indexes; the Dow slipped 0.09%. Our chip stock selloff analysis covers the slide in chipmakers.

Why did gold fall after the CPI report?

Higher yields and a stronger dollar weighed on gold. Finwire said higher yields raise the cost of holding bullion, which pays no interest. It said spot gold fell 1.3% to $4,100 an ounce, its third straight daily drop. Finwire also said markets raised the odds of a Federal Reserve rate hike in October to about 42% to 43%, from about 22% before the report.

Why did the yen and Treasury yields end little changed?

Both reversed their first reactions. The dollar climbed to 158.95 yen after the report, Yahoo Finance data show, but ended flat. Before the release, Tradingpedia said the risk that Japanese authorities could intervene to support the yen was restraining bets against it.

The 10-year yield rose to about 5.32% in 15-minute Yahoo Finance data shortly after the release but closed at 5.19%, the Treasury said. The 2-year yield rose 3 basis points to 4.82%, so the gap between the two narrowed.

Bitcoin fell as much as 1.7% to around $81,700, Finwire said, and it remains more than 30% below its record high.

What comes next?

The next CPI report, for October, is due Tuesday, Nov. 10, at 8:30 a.m. ET, the BLS said. For a contrast, China's September inflation was far milder, as our China CPI and PPI analysis shows. Live levels are on our world markets page.

Sources