U.S. CPI revealed a strong 0.3% gain in December


The dollar moved higher after the mix of data, where retail sales were about in-line, and CPI was a touch warmer on a core basis. EURUSD dipped 20 points to 1.2148. The USDJPY popped from under 111.20 to near 111.68, retesting the immediate resistance at 111.73. However the hourly candle closed below this resistance area,  suggesting that this push higher has faded, and that the downwards momentum still holds for the day. Equity futures are off their highs, but continue to indicate a higher Wall Street open, while yields edged up a couple of basis points.

U.S. December retail sales increased 0.4% for the headline and ex-autoS, while U.S. CPI edged up 0.1% in December, with the core up 0.3%. Prior data are not revised, leaving the November headline rising 0.4% and the ex-food and energy component up 0.1%. The 12-month rate slowed to 2.1% y/y versus 2.2% y/y, but the core accelerated a bit to 1.8% y/y versus 1.7% y/y. Energy prices declined 1.2% versus the 3.9% bounce. Transportation costs dipped 0.2% from 1.9%. Services prices increased 0.3% from 0.2%. Housing costs, including owners’ equivalent rent, were up 0.3%. Foods/beverage prices were up 0.1% after an unchanged November print. Apparel remained soft and slid 0.5% after falling 1.3% previously and is now down for four straight months. Tobacco dropped 0.6% from 0.2%. Commodities prices were 0.1% lower versus the prior 0.7% gain. The strength in core prices is likely to weigh on Treasuries.


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