When is the US consumer inflation (CPI report) and how could it affect EUR/USD? – by hareshmenghani Inflation UnitedStates Fed EURUSD Currencies
merican session at 12:30 GMT. On a monthly basis, the headline CPI is anticipated to decline by 0.2% during the reported month. The yearly rate is also expected to decelerate to 8.1% in August from the 8.5% previous. Meanwhile, core inflation, which excludes food and energy prices, is projected to remain steady at 0.3% in August and tick higher to 6.1% on yearly basis, up from 5.9% in July.
Analysts at Deutsche Bank offered a brief preview of the report and explained: “We expect a slight decline in the headline CPI number but an acceleration of +0.30% in core, which would continue the pattern from July's reading which came in lower than expected. We believe the YoY headline CPI should fall five-tenths to 8.0%, while core should tick up a tenth to 6.0%.
Conversely, stronger inflation figures will revive bets for faster interest rate hikes by the US central bank. This will be enough to provide a fresh lift to the greenback and attract aggressive selling around the EUR/USD pair. The immediate market reaction to the report, however, is more likely to be limited as investors now start repositioning for the FOMC monetary policy meeting on September 20-21.
“On the downside, 1.0100 aligns as key support. A daily close below that level could be seen as a significant bearish development and bring in additional sellers, dragging the pair back toward 1.0050 and 1.0000 ,” Eren adds further.
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