The US dollar strengthened against the major currencies after data on inflation and the US labor market. The report submitted by the Ministry of Labour showed that consumer prices in September fell slightly compared to August, but remained unchanged in annual terms.
According to the data, the seasonally adjusted consumer price index fell 0.2% in September. Meanwhile, the core index, which excludes prices of food and energy categories, rose 0.2%. Economists had expected overall prices decreased by 0.2% and the core index increased only 0.1%. In annual terms, prices have not changed, but the core index rose by 1.9%. It forecasts a decline of 0.1% and growth of 1.8%, respectively.
The Labor Department reported that, as in previous months, the decline in oil prices had the greatest pressure on inflation in September. The economic slowdown in China and emerging markets, coupled with the expectation of the Fed raising interest rates, as did the US dollar is stronger, leading to cheaper imports.
The report also showed that the index of energy prices fell by 4.7% in September, the head of which stood a reduction in the cost of gasoline (by 9% to a seasonally adjusted). Over the past year energy prices fell by 18.4%, and gasoline prices have fallen by 29.6%. Meanwhile, the cost of food rose in September by 0.4% MoM and 1.6% per annum. Housing costs rose by 3.2% per annum, and the cost of public services, excluding energy rose 2.7%.
Too low inflation has become a major problem for Fed officials to discuss when to begin raising interest rates, which remain unchanged from 2008. Fed Chairman Yellen and other officials said they are waiting for clear signs of inflation to start raising rates.
In addition, the US Department of Labor said the number of Americans who first applied for unemployment benefits, sharply decreased last week, while reaching the lowest level in more than 40 years.
According to the report for the week ended October 10, the number of initial applications for unemployment benefits fell by 7,000 (seasonally adjusted) and reached 255 000, which is the lowest since November 1973. Economists had expected 270,000 new claims. The figure for the previous week was revised downward - to 262 000 to 263 000. It is worth emphasizing the number of calls remained below the psychological threshold of 300 000 for 32 th consecutive week, which is the longest series in more than 40 years. Also, the Labor Department said that there were no special factors influencing the latest weekly data.
Meanwhile, it became known that the moving average for 4 weeks, which smooths the volatile weekly figures, dropped to 2250 - up to 265 000 (the lowest figure since December 1973). Meanwhile, the number of people who continue to receive unemployment benefits fell by 50,000 to 2.158 million. For the week ended October 3rd. Recall data on re-treatment come with a week delay
The euro earlier fell sharply against the US dollar, the main pressure exerted statements by the European Central Bank Ewald Nowotny. He noted that the ECB does not hold out much to the inflation target, in connection with which the regulator requires a new set of tools. "It is clear that we need additional tools," - said Nowotny, stressing that the basic inflation indicators are also below the target mark, so that new instruments should include structural measures. Recall that in September, consumer prices fell by 0.1% per annum. The decrease in prices occurred for the first time since March, when the ECB began a program of asset purchases, which gave rise to speculation about a possible continuation or increase in the program.
According to the latest forecasts of the ECB at the end of 2015 inflation will be at 0.1 percent and will rise to 1.1 percent next year. "Thus, we are clearly not up to the target value. The main reason for low inflation is the sharp fall in oil prices and raw materials - said Nowotny. - It is obvious that in this situation need a strong economic growth, which should help reduce the unemployment rate and bring inflation to the target level. "