The US dollar posted its first weekly loss in five weeks, despite an upside surprise in the September inflation report.
Treasury yields and the greenback initially rose after both headline and core CPI surprised to the upside, though by Friday both moves had fully reversed. The 10-year Treasury yield ended the week about 15bps lower, and the US Dollar Index fell. The proximate trigger was a sharp sell-off in AI-related stocks, viewed as bearish for the dollar given America’s heavy investment in artificial intelligence. The dollar’s failure to rally on a hot US inflation print and a risk-off week also suggests a one-sided market in which most speculators who want to buy the dollar have done so already. We think the greenback has found a ceiling, at least for now.