Jump to content

US Dollar Price Action: How Will Markets React to US CPI?


Recommended Posts

US CPI, US DOLLAR ANALYSIS AND NEWS

  • Firm Break of Parity in Euro Likely on Higher Than Expected US CPI Print
  • US CPI Projected to Rise to 8.8%

US Dollar Price Action: How Will Markets React to US CPI?

All eyes are on today’s US CPI report and judging by the White House Press Secretary’s comments the Biden Administration is gearing up for another sizeable inflation print. As it stands, market consensus is looking for a reading of 8.8%, however, in light of recent comments made by the White House risks appear geared towards another upside surprise. Below is a comparison in comments made by the press secretary ahead of last month’s shock CPI reading.

June: White House Press Secretary expects inflation numbers to be "elevated" - US CPI 8.6% vs 8.3% expected

July: White House Press Secretary expects inflation data to be "highly elevated"- US CPI expected at 8.8%

However, the question is, does “highly elevated” mean 8.8% (higher than prior, but in-line) or say a 9-handle inflation print, because there would be a notable difference in the market's reaction. As a reminder, from a trader's point of view when comparing data, the most important factor is how it compares to market expectations. As such, would we see inflation above expectations, which would likely propel the USD and US yields higher, while also weighing on risk sentiment. Of note, the S&P 500 is still below its pre-CPI level at 4014.

The CPI and Forex: How CPI Data Affects Currency Prices

CPI Data

  • CPI Expected 8.8% (Previous 8.6%), Range 8.5%-8.9%
  • Core CPI Expected 5.7% (Previous 6.0%), Range 5.5%-6.0%

The table below shows the multi-asset reaction to US CPI in recent months.

Figure 1. Multi-Asset Response to US CPI

US Dollar Price Action: How Will Markets React to US CPI?

Source: Refinitiv, DailyFX, Bloomberg

 

Jul 13, 2022 | DailyFX
Justin McQueen, Strategist

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,663
    • Total Posts
      91,987
    • Total Members
      41,953
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    MichaelLP
    Joined 29/03/23 17:05
  • Posts

    • #EURJPY: Detailed Structure AnalysisHere are my latest structure analysis for ⚠️EURJPY.Support 1: 138.80 - 139.25 areaSupport 2: 137.38 - 138.18 areaResistance 1: 143.19 - 143.6 areaResistance 2: 145.00 - 145.58 areaResistance 3: 146.40 - 146.7 areaConsider these structures for pullback/breakout trading.
    • #USDCAD: Important Breakout   USDCAD broke and closed below a solid horizontal demand cluster on a daily. The broken structure turned into resistance now.   Probabilities will be high to see a bearish move from that. Goals will be 1.356 / 1.346 For Additional confirmation use: the best mt4 indicators
    • Dollar Index (#DXY): Key Levels to Watch This WeekHere is my latest structure for Dollar Index.Resistance 1: 103.11 - 103.63 areaResistance 2: 104.74 - 105.1 areaResistance 3: 105.667 - 105.88 areaSupport 1: 100.82 - 100.88 areaConsider these structures for pullback/breakout trading.For Additional confirmation use: Swing Trading Indicators
×
×
  • Create New...