Forex Today: Dollar looks to stabilize following Thursday's selloff

Here is what you need to know on Friday, October 14:

Following Thursday's sharp decline, the US Dollar Index stays in a consolidation phase near mid-112.00s early Friday. Despite the stronger-than-expected September Consumer Price Index (CPI) data, Wall Street's main indexes registered impressive gains and US stock index futures trade in positive territory on the last day of the week. The European economic docket will feature Trade Balance data for August. Later in the day, the US Census Bureau's September Retail Sales report and the University of Michigan's preliminary Consumer Sentiment Survey for October will be looked upon for fresh impetus. Finally, the Fed will publish its Index of Consumer Inflation Expectations for the third quarter.

The annual Core CPI in the US climbed to 6.6% in September from 6.3% in August, the US Bureau of Labor Statistics reported on Thursday. With this print coming in above the market expectation of 6.5%, the dollar gathered strength against its rivals with the initial reaction. However, investors refrained from betting on a 100 basis points Fed rate hike in November despite hot inflation data and US stocks surged higher after having opened deep in negative territory. Meanwhile, the benchmark 10-year US Treasury bond yield, which surged to its strongest level since June 2008 near 4.1% after the data, turned south in the late American session and closed the day below 4%. 

EUR/USD made a sharp U-turn and registered strong daily gains on Thursday after having dropped to a fresh two-week low of 0.9632 in the early American session. The pair preserves its bullish momentum early Friday and continues to stretch higher toward 0.9800.

GBP/USD gained more than 200 pips on Thursday and erased all the losses it suffered earlier in the week. Renewed expectations for the UK government to adjust the mini-budget helped the British pound outperform its rivals. Additionally, the Bank of England (BoE) accepted nearly 4 billion sterling of offers in its daily gilt-purchase operations. Friday will be the last day of the BoE's emergency buyback programme and investors will keep a close eye on political developments. Cable was last seen consolidating Thursday's gains in a narrow range above 1.1300.

USD/JPY climbed to its highest level in over two decades above 147.50 with the immediate reaction to the US data but plunged nearly 100 minutes in a matter of minutes. Although there is no official word, markets speculate that the Japanese government may have intervened in the FX market. Nevertheless, the pair failed to make a steady decline and returned back above 147.00 early Friday.

Gold staged a decisive rebound after dropping to a two-week low near $1,640 on Thursday but ended up closing the day in negative territory. With the US yields edging lower in the early European morning, XAU/USD started to extend its rebound and was last seen posting small daily gains near $1,670.

Bitcoin capitalized on the improving market mood on Thursday and preserved its bullish momentum early Friday. At the time of press, BTC/USD was up more than 2% on the day at $19,800. Ethereum rebounded from multi-month lows it touched at $1,190 on Thursday and was last seen rising more than 3% on the day at $1,325.