Job fears rise as NY Fed consumer survey points to steady inflation expectations

Americans' near-term inflation outlook held steady in October, with expectations that petrol prices could moderate over the next twelve months. The New York Fed Survey of Consumer Expectations (SCE) put one-year-ahead inflation expectations at 3.9%, unchanged from September.

Households were more optimistic about their personal finances, while inflation expectations at the three- and five-year horizons held at their previous readings of 3.3% and 3%, respectively.

Consumers foresee unemployment climbing to its highest rate since 2020, according to the survey. Expectations for home price growth, meanwhile, remained steady at 3%.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

How Is the US Dollar Performing Today?

Against the Swiss Franc, the US Dollar recorded its strongest performance today. The table below sets out the US Dollar's (USD) percentage changes against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.54%	-0.49%	-0.30%	0.05%	-0.64%	-1.32%	0.12%
EUR	0.54%		0.05%	0.25%	0.58%	-0.11%	-0.79%	0.65%
GBP	0.49%	-0.05%		0.21%	0.53%	-0.17%	-0.84%	0.60%
JPY	0.30%	-0.25%	-0.21%		0.34%	-0.35%	-1.02%	0.41%
CAD	-0.05%	-0.58%	-0.53%	-0.34%		-0.68%	-1.35%	0.07%
AUD	0.64%	0.11%	0.17%	0.35%	0.68%		-0.67%	0.76%
NZD	1.32%	0.79%	0.84%	1.02%	1.35%	0.67%		1.45%
CHF	-0.12%	-0.65%	-0.60%	-0.41%	-0.07%	-0.76%	-1.45%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the US Dollar on the left and following its row across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote) in the intersecting cell.

Inflation: Key Questions Answered

How is inflation defined?

A rise in the cost of a representative basket of goods and services is measured as inflation. The headline measure is generally reported as a percentage change both month-on-month (MoM) and year-on-year (YoY). By excluding volatile components such as food and fuel, whose prices can move with geopolitical developments and seasonal factors, core inflation provides the measure economists focus on. It is also the measure targeted by central banks, whose mandate is to maintain manageable inflation, typically around 2%.

What does the Consumer Price Index (CPI) measure?

Changes in the cost of a basket of goods and services over time are tracked by the Consumer Price Index (CPI). The index is generally reported as a percentage change month-on-month (MoM) and year-on-year (YoY). Central banks target Core CPI, which strips out volatile food and fuel components. A Core CPI reading above 2% usually leads to higher interest rates, while a reading below 2% typically has the reverse effect. As higher rates support a currency, rising inflation generally strengthens it; falling inflation tends to have the opposite effect.

Why does inflation affect foreign exchange rates?

A country's currency gains value when inflation is high and loses value when inflation is low, even if that relationship seems counter-intuitive. To curb elevated inflation, the central bank will normally increase interest rates. Those higher rates draw in more global capital from investors seeking attractive returns on their money.

Why do inflation trends matter for Gold prices?

Gold historically attracted investors during periods of high inflation because it retained its value. Investors still often seek its safe-haven qualities during extreme market turmoil, but in most circumstances high inflation does not prompt the same response. The reason is that central banks raise interest rates to bring inflation under control. For Gold, higher rates are unfavourable: they raise the opportunity cost of holding the metal rather than an interest-bearing asset or money in a cash deposit account. Conversely, lower inflation generally supports Gold by bringing interest rates down and making the precious metal a more attractive investment alternative.