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US August CPI Overview

Thursday’s US economic docket highlights the release of latest consumer inflation figures for August, scheduled at 1230GMT. The headline CPI is expected to have risen by 0.3% m/m in August, while the yearly rate is seen ticking lower to 2.8% from 2.9% previous. Meanwhile, core CPI, which excludes volatile food and energy prices, is seen rising by 0.2% m/m and on yearly basis is anticipated to hold steady at 2.4%.

Deviation impact on USD/JPY

Readers can find FX Street’s proprietary deviation impact map of the event below and as observed, the reaction in case of a relative deviation of +1.81 to -1.33 in the core CPI print is likely to be in the range of 15-23 pips during the first 15-minutes and could stretch to around 47-55 pips in the following 4-hours.

How could it affect USD/JPY?

Yohay Elam, FXStreet’s own Analyst noted: “111.80 was the peak in late August. It is followed by 112.15 which capped the pair in late July and then by the swing high of 113.15.”

“110.70 was a support line in late August. 110.10 was a swing low back in mid-August. The 109.70 was the low in August and the lowest since June,” he adds further.

Key Notes

   “¢    US inflation preview: Expect a straightforward USD reaction, Fed may find its limits

   “¢    How to trade the US Inflation data with USD/JPY

   “¢    USD/JPY refreshes session tops around mid-111.00s, US CPI in focus

About the US CPI

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

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