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US inflation is not going anywhere fast. What’s next? What does this mean for the US Dollar?

Here is their view, courtesy of eFXdata:

CIBC Research discusses its reaction to today’s US CPI print for the month of September.

Today’s CPI report showed that September was another soft month for prices, with both headline and core price pressures disappointing expectations.

Headline CPI advanced by 0.1%, leading the annual rate down four ticks to 2.3% (vs. 2.4% expected). Most of the deceleration was expected but the negative surprise was driven by core prices which were also only able to advance by 0.1%. That softness in core was driven largely by another 0.3% drop in goods ex. food and energy prices, with used vehicles showing a notable decline.

Core CPI inflation is now tracking 2.2% which likely implies a tick down in the Fed’s preferred measure of inflation, core PCE, to 1.9%, a touch below the central bank’s target.

As a result, the slight downside miss should be moderately negative for the US$ and positive for fixed income,” CIBC argues.

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