US: Headline CPI inflation to accelerate to 2.2% y/y in February - TDS

Analysts at TDS expect US headline CPI inflation to accelerate to 2.2% y/y in February, with prices up a seasonally adjusted 0.1% m/m.

Key Quotes

“Energy prices are fairly neutral while we see scope for a stronger pickup in food prices, as presaged by higher import prices. Excluding food and energy, we expect core CPI to print a 0.2% m/m increase, moderating from the previous 0.3% print. With imported consumer price inflation still benign, we do not look for the strength in January to be repeated. We also expect some oneoffs from the previous month to correct, such as the apparel category (+1.7% m/m in January). We therefore lean against upside risks this month.”

“FX: With core CPI forecast to print on consensus expectations, we do not look for any particular outsized moves in the G10 FX space. With market-implied expectations for Fed hikes so well supported (and a near certainty next week), it may take a rather significant disappointment to derail the USD. As such, market focus may wander elsewhere, including on political and policy developments related to recently introduced tariffs and the ECB conference this week where the doves should fly. Against this backdrop, we think the USD is prone to some sideways chop across the G10 but may see selective strength against some currencies like the EUR and CAD. 1.2250 and 1.2150 should be key supports for EURUSD while 1.2870 will be an important pivot for USDCAD.”