Trading today’s US CPI print

Today is the release of the US CPI print. The market has been laser-focused on US growth and inflation and today’s print is likely to provide a decent intraday opportunity on any significant deviations. So, let’s see what is currently expected.

Peak inflation?

The headline inflation print is expected to fall to 8.7% from the prior print of 9.1% However the core inflation print is expected to move higher to 6.1% from the prior reading of 5.9%. So, the expectations are in keeping with the hopes that the US has passed peak inflation.

What’s the deviation to look for?

There are two possible trades here.

Possible trade 1

If the headline comes in above maximum expectations at 9% and the core is above 6.2% then markets may still see the need for aggressive Fed action. 75 bps hikes mate be even more priced in for the Fed’s September meeting and the USDJPY can move higher on the release. Scalping USDJPY higher, using pivot points to manage risk and ‘take profit’ would be the possible choice.

Possible trade 2

If, on the other hand, the headline comes in below minimum expectations at 8.5% and the core is below 6% then markets will breathe a sigh of relief that the Fed is under less pressure to hike rates by 75 bps in September. This can result in a move lower in US10 year yields, USDJPY lower, XAGUSD and XAUUSD higher. Once again, daily pivot points may be used to define risk and ‘take profit’.

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