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Previewing tomorrow’s inflation report from the U.S., TD Securities analysts said that they expected the headline CPI to stabilize at 1.6% on a yearly basis, “reflecting a 0.2% m/m increase with risk for a 0.3% print.”

Key quotes

We expect core CPI to print another solid 0.2% m/m increase, leaving the annual core inflation rate unchanged at 2.2% y/y. We expect to see gains in both core goods and services component prices. There is a risk for a slight deceleration in shelter, but we expect strength elsewhere across goods and services, including tariff-related categories, medical care, and airfares. Looking ahead, we expect annual headline CPI inflation is likely to remain below 2% until December assuming a modest drift higher in oil prices and core inflation holding slightly above 2%.”

“With rates in a trading range and G10FX largely in a lifeless state, there is very little that an on-consensus CPI reading (or even surprise on either side) will do to inject a little volatility in FX.”

“The USD has enjoyed a decent bid following the ECB-dovish pivot last week, but the global macro impulse has been sorely lacking suggesting that regardless of the outcome in US CPI (or incoming US data) will do much to shake the dollar’s stranglehold in the G10 at the moment. As long as risk stablizes, there may be some room to skim some of the USD’s froth though we suspect this will be marginal at best. EURUSD holding the 1.12 handle last week was notable though a macro  impulse to shift this higher remains absent.”