US CPI Preview: The Dollar can build on the release for some further stabilisation – ING
|The Dollar has found a bit of support into today’s US Consumer Price Index (CPI) data. Economists at ING analyze Greenback’s outlook.
Core CPI at 0.3% can help the Dollar
February inflation numbers are expected to show a flattening in headline inflation at 3.1% year-on-year and, most importantly, a deceleration in the core rate from 0.4% to 0.3% month-on-month and from 3.9% to 3.7% YoY.
Our economists agree that we’ll see a consensus 0.3% MoM core print. Expect large downside volatility for the Dollar if we see a 0.2% MoM core print. Unlike US jobs data, that would endorse the optimism on disinflation showed by Fed Chair Jerome Powell last week and push markets to add 5 bps to fully price in a June cut as well as add bets of a move in May.
If we are right with our 0.3% call, we may not see a big market impact already today, but it could definitely set the tone for a more defensive stance on FX – i.e., a gradual rotation back to the Dollar – ahead of next week’s FOMC meeting.
We were expecting this to be the week for a stabilisation or moderate recovery in the Dollar, and we continue to see an upward-tilted balance of risks for the USD in the coming days, with a possibility for a return to the 103.00/103.50 area in DXY.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.