Hot CPI and Waller's 50bp warning lift the dollar; gold drops 2.67%

US consumer prices rose 0.4% in October against a 0.3% forecast, and core prices 0.3% against 0.2%, after Fed Governor Christopher Waller had said a 50-basis-point hike should be considered if inflation stayed elevated. The dollar closed higher against all seven majors on our feed, a session after falling against all seven, and gold fell 2.67% to $4,031.10.

What the data showed

• USD · CPI: 0.4% on the month in October, against 0.3% expected, after 0.6%.

• USD · Core CPI: 0.3% on the month, against 0.2% expected, after 0.3%. Action Forex said it was the third month in a row at 0.3%, and investingLive said the annual rates were not published.

The Fed and yields

• Waller backed a 25-basis-point Fed hike in December at the Bank of England Watchers Conference in London, before the data, and said a 50-basis-point move should be considered if October inflation stayed elevated, Action Forex reported. Dallas Fed President Lorie Logan said the Fed would need at least two more 25-basis-point hikes, FXStreet said, and after the release Governor Michelle Bowman said "CPI data suggests inflation pressures may persist".

• All 101 economists in a Reuters poll expected a 25-basis-point hike on 9 December, to 4.00%–4.25%, FXStreet reported. The US two-year yield rose about 12 basis points to 4.68%, Action Forex said, and the Treasury sold $42 billion of 10-year notes at 5.02%, according to investingLive, a yield FXStreet, an hour after the close, called the highest since 2006.

The dollar won back much of Monday's fall

• The dollar closed higher against all seven majors on our feed, from 0.49% against the New Zealand dollar to 0.87% against the Australian dollar. Action Forex said it strengthened broadly as the inflation data reinforced Waller's warning. EUR/USD fell 0.53% to 1.1164, and FXStreet said after the close that the euro was back in the lower half of the 1.1100–1.1300 range it has held for five weeks.

• GBP/USD fell 0.73% to 1.33436, below Friday's close of 1.33524, so all of Monday's rise was gone. Its low, 1.33121 at 16:43 UTC, was its lowest since late October, FXStreet said.

• AUD/USD fell 0.87% to 0.68658, the biggest loss against the dollar. The tell in our weekly wrap, a session close below 0.6854 or above 0.6952, has still not fired: the pair dipped below the lower line several times between 15:50 and 18:16 UTC, down to 0.68436 at 16:27 UTC, under Friday's low of 0.68542, but closed 12 pips above it. investingLive said weak Australian business and consumer surveys had lowered the odds of a sixth RBA hike.

• NZD/USD fell 0.49% to 0.56037, giving back about a third of Monday's post-election rise. USD/CAD rose 0.50% to 1.41882, its highest close since 14 October on our feed; FXStreet put the pair at its highest since 16 October as the inflation data lifted the dollar and falling oil weighed on the Canadian dollar.

• USD/JPY rose 0.53% to 158.742, its eleventh close in a row above 157.50 and the highest of them, after a high of 158.85 at 19:33 UTC. FXStreet said after the close that the yen was at its weakest against the dollar since mid-October, although a member in the Bank of Japan's Summary of Opinions had said it was appropriate to keep raising rates.

Gold and oil

• Gold fell 2.67% to $4,031.10 on our feed, after a low of $4,013.68 at 16:48 UTC, and closed below Friday's $4,065.82, erasing all of Monday's gain. It was still its fifth close in a row above $4,000; the session's high, $4,146.52, came in its first hour. FXStreet tied the slide to hawkish Fed officials after the inflation report and to Treasury yields above 5%.

• WTI slipped below $84, its lowest since late August, on hopes for US-Iran diplomacy, FXStreet said. President Trump said further strikes on Iran would not be necessary but that the US remained "locked and loaded", according to a Bloomberg report carried by FXStreet.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 71, from 52. Its news component was at its full 20 at both closes, so all 19 points of the rise came from its volatility component. The CTS read 50, unchanged, with its carry backdrop at 64 out of 100; the FSI read 49, Neutral, from 48.

• Our strength table: no clear leader and no clear laggard over the session's 1,439 minutes, although the dollar rose against all seven. The table counts minutes in each place, not the session's net move.

Today: ECB President Lagarde speaks at 09:45 UTC, and US markets are on a partial holiday for Veterans Day, investingLive noted.