US CPI Due
The US Dollar is on watch today as traders prepare to receive the latest US CPI report this afternoon. Yesterday, the August PPI release was in dovish territory with both headline and core PPI at -0.1%, down from 0.7% prior and well below the 0.3% the market was looking for. The data has raised the prospect that today’s CPI report could undershoot forecasts. The market is looking for annualised CPI to rise to 2.9% from 2.7% prior while core and headline monthly readings are expected to print 0.3% vs 0.2% prior and 0.3% vs 0.3% prior.
Market Implications
If an uptick in annualised inflation is seen, this might see USD squeezing a little higher today, casting uncertainty over the three .25% rate cuts the market is now looking for ahead of year end. However, if we see CPI undershoot as PPI did yesterday, this could be firmly bearish for USD, cementing traders’ dovish expectations over the remainder of the year. Given the weakness we’ve seen in labour market data recently, any fresh weakness in inflation will be a heavy dovish development and could fuel strong downside volatility in USD ahead of the September FOMC next week.
Technical Views
DXY
The market is attempting to break back above the 98 level here with the retest of the broken bull channel lows sitting just above that level. While this area holds as resistance, risks of a fresh downside break are seen with 96.89 the key support to watch. If broken, 94.85 is the deeper bear target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.