US headline inflation rose 0.3% month-on-month, a touch below the 0.4% consensus, while core rose a very modest 0.1% (consensus 0.3%). A softer inflation print helped drive modest USD weakness. Economists at TD Securities think this has limitations, however, as the Fed's meeting next week will likely keep established ranges intact.
US price growth moderated slightly in August
“The total CPI was +0.3% MoM in August, a little below the 0.4% consensus. The core index was +0.1% MoM, well below the 0.3% consensus and down from +0.3% in July, +0.9% in June, +0.7% in May and +0.9% in April. The 12-month change in the overall CPI fell to a still-high 5.3% from 5.4%; the 12-month change in core fell to 4.0% from 4.3%.”
“The reaction following the CPI print was playbook, with a softer core measure contributing to a knee-jerk reaction lower in the USD. But, in gauging the capacity for further retrenchment, we think the dip will be fairly shallow for the USD as the Fed's shadow lingers. For EUR/USD, that should mean fairly rangebound behavior until then, with the 1.1909 level key resistance and 1.1750 pivotal support.”
“While the inflation numbers might be the start of some ‘relief’ and positive for high beta/risk currencies, we think the market will need to get through the Fed meeting first before it can break ‘free’.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.