US CPI Preview: A soft reading should not be taken as an indication that inflation is quickly fading – Wells Fargo

Matías Salord FXStreet

After a week with a few economic reports, next week the calendar is busy in the US. Special attention will receive the Consumer Price Index on Tuesday. According to analysts at Wells Fargo, look for the headline to rise 0.4% in August. They warn a soft reading should not be taken as an indication that inflation is quickly fading.

Key Quotes:

“We look for headline and core CPI to increase 0.4% and 0.2%, respectively, in August. Our bottoms-up forecast indicates that both are close calls, with the risk for the headline tilted to the downside and the risk for the core tilted to the upside. Used car prices could finally give up some ground after three-straight months of declining wholesale prices, while travel-related inflation should soften further in the wake of Delta concerns. But food, shelter and goods prices, apart from used cars, are expected to put up further strong gains.”

“A softer monthly print should not be taken as an indication that inflation is quickly fading back to its anemic pre-COVID pace. The initial stage of reopening may be behind us, but the economy remains in transition mode. Until inventories are rebuilt and workers return to the labor market in greater numbers, inflation is set to remain elevated. The duration of “transitory” continues to lengthen.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD remains weak near 1.1800

EUR/USD rapidly fades Tuesday’s uptick and resumes its weekly retracement, challenging the 1.1800 support at the end of the NA session on Wednesday. The pair’s drop comes in response to extra gains in the US Dollar. Moving forward, the ECB meets on Thursday and is seen leaving its policy rate unchanged.

GBP/USD churns near 1.3700 ahead of BoE rate call

GBP/USD remains trapped in a near-term cycling pattern on Wednesday, continuing to churn aimlessly between 1.3700 and 1.3650. Cable traders are unlikely to pick a meaningful direction until after the Bank of England’s latest interest rate decision, due during Thursday’s London market session.

Gold stays offered below $5,000

Gold is back under pressure on Wednesday, slipping below the $5,000 mark per troy ounce as Wednesday’s session draws to a close. The pullback comes amid renewed strength in the US Dollar alongside mixed moves in US Treasury yields across the curve.

Dogecoin plummets as retail investors exit amid broad market sell-off

Dogecoin holds near support at $0.1000 at the time of writing on Wednesday, as bears tighten their grip on assets across the crypto market. The leading meme coin remains on the back foot, weighed down by risk-off sentiment, low retail activity and weak technicals.

The AI mirror just turned on tech and nobody likes the reflection

Tech just got hit with a different kind of selloff. Not the usual rates tantrum, not a recession whisper, not even an earnings miss in the classic sense. This was the market staring into an AI mirror and recoiling at its reflection.

Ripple stabilizes amid mixed signals as ETF inflows resume despite low retail activity

Ripple hovers around the $1.60 pivotal level at the time of writing on Wednesday, reflecting stable but weak sentiment across the crypto market. Intense volatility triggered a brief sell-off on Tuesday, driving the remittance token to pick up liquidity at $1.53 before recovering to the current level.