When is the US CPI report and how could it affect USD/JPY?

US August CPI Overview

Thursday's US economic docket highlights the release of the latest consumer inflation figures, due later during the early North-American session at 12:30GMT. The headline CPI is anticipated to tick higher by 0.1% month-on-month (m/m) in August as compared to a modest rise of 0.3% in the previous month, while the yearly rate is expected to hold steady at 1.8%. On the other hand, core CPI - excluding food and energy costs - is predicted to have increased by 0.2% m/m rate as compared to 0.3% rise in July and the annual core inflation is seen at 2.3% vs. 2.2% previous.

How could it affect USD/JPY?

As Joseph Trevisani, FXStreet's own analyst writes – “If CPI and by extension PCE are weaker than expected, the rate cut will be said to serve a dual purpose. If inflation is higher than anticipated it will be ignored. Either way, the policy and market impact will be minimal.”
Meanwhile, a softer than expected reading will be enough to exert some fresh pressure on the US Dollar and contribute towards the extension of the pair's intraday rejection slide from 100-day SMA. Alternatively, a stronger reading seems unlikely to provide any meaningful impetus to the major and is more likely to be overshadowed by the post-ECB volatility across the FX market.

Key Notes

US CPI Preview: Stable and secondary
US: Core CPI to rise to 2.3% y/y in August – Scotiabank
USD/JPY technical analysis: The recent bullish run falters near 100-day SMA

About the US CPI

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

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