Inflation is not going anywhere fast: CPI dropped 0.1% m/m and rose 0.1% y/y. Core CPI did rise 0.2% m/m as expected but only +1.8% y/y, the same as in July and below expectations. The positive number here is that real weekly earning rose 2.3% y/y, which is stronger than last month, but basically only 0.1% stronger than the average hourly earnings reported in the latest NFP.
The US dollar slips along with EUR/USD rising to 1.1250 and USD/JPY ticking down. The moves aren’t extreme as the countdown towards the Fed’s decision tomorrow is capturing markets’ minds.
The US was expected to report no change in the headline Consumer Price Index (CPI) for the month of August, month over month. Year over year, a rise of 0.2% was on the cards. Core CPI, which is of higher importance to the Federal Reserve, carried expectations for a rise of 0.1% m/m and 1.9% y/y, up from 1.8% seen in July.
Towards the publication, the dollar was backing off, with EUR/USD at 1.1240, USD/JPY at 120.66, GBP/USD at 1.5440, USD/CAD at 1.3240, AUD/USD at 0.7160 and NZD/USD around 0.6340.
Inflation has been low of late, and this is one of the reasons holding back the Fed, in contrast with their other mandate, employment, which is looking more upbeat.
Fed decision in September – all the updates
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