Consumer Prices Accelerated in September

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The U.S. Dollar recovered against a basket of currencies late in the session on Friday after a weaker than expected consumer inflation report drove prices lower.

European shares rose to their highest in almost four months, helped by corporate earnings updates. The catalyst behind the precious metals strength was low inflation's impact on the pace of US interest rate hikes by the Federal Reserve.

Stocks on major world markets, however, hit their fourth record high in a row, with Wall Street moving higher as some investors bet the inflation data could curb future rate hikes while others eyed trade discussions and retail data.

The harmonized index of consumer prices in September 2017 compared to August 2017 was 99.8%, i.e. the monthly inflation was -0.2%.

Wall Street had a variety of drivers ranging from trade talks, which helped the materials sector, to oil prices, which boosted the energy sector, and retail data that helped consumer stocks, according to Tim Ghriskey, chief investment officer of Solaris Asset Management in NY.

The Dow Jones Industrial Average fell 17.09 points, or 0.07 percent, to 22,855.8, the S&P 500 lost 2.1 points, or 0.08 percent, to 2,553.14 and the Nasdaq Composite dropped 2.41 points, or 0.04 percent, to 6,601.14.

"Hurricane effects are clearly visible - higher gasoline prices boosted gasoline station sales and strength can also be seen in other components as it is likely that there was some uplift as households start to replace lost items", said James Knightley, chief global economist at ING.

The pan-European FTSEurofirst 300 index rose 0.01 percent and MSCI's gauge of stocks across the globe gained 0.12 percent.

Meanwhile, the monthly rise in vehicle sales was 3.6% in September, with unit sales reaching a 12-year high, and sales of building materials and garden equipment were up 2.1% on the month. The rise was the biggest since January and lifted the year-on-year gain in the CPI to 2.2 percent from 1.9 percent in August. The year-on-year core CPI has now increased by the same margin for five consecutive months. Stripping out the impact of volatile food and energy, Core CPI rose a much smaller 0.1%. The increase in the CPI was broadly in line with economists' expectations. The core PCE has consistently undershot the United States central bank's 2 percent target for more than five years.

December U.S. Dollar Index futures settled at 92.935, up 0.37 or +0.04%. Fed Chair Janet Yellen has said that temporary factors such as one-off price cuts by wireless telephone companies are holding back inflation. The rate also matched the estimate published on September 28.

There were also decreases in the cost of medical care, apparel, and household furnishings.

Bitcoin smashed through the $5,000 barrier for the first time and was last up 10 percent on the day.

In a separate report on Friday, the Commerce Department said retail sales jumped 1.6 percent in September likely as reconstruction and clean-up efforts in areas devastated by Harvey and Irma boosted demand for building materials and motor vehicles. Last month's increase in retail sales was the largest since March 2015. Prices for new motor vehicles fell 0.4 percent as manufacturers resort to deep discounting to eliminate an inventory overhang. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

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