Major market moves follow surprisingly soft US inflation report | Forexlive

The US dollar has crumbled lower in the aftermath of the October CPI report showing inflation at 7.7% compared to 8.0% expected. It’s the first clear sign of a turn in prices and the market is quickly pricing in a less-hawkish Federal Reserve.

The market is now pricing in a 71% chance of a 50 basis point Fed hike in December and the terminal top has fallen to 4.87% from 5.07% yesterday.

The US dollar has crumbled with USD/JPY down to 144.15 from 146.00 ahead of the report. Hedge fund managers in the BofA survey voted dollar longs as the most-crowded trade in the world so this could kick off a real squeeze.

Overall the moves are massive with cable also up by more than 200 pips. S&P 500 futures are up 3.0% and US 10-year yields down 22 basis points to 3.92%.