US CPI Overview
Wednesday's US economic docket highlights the release of the critical US consumer inflation figures for July, scheduled later during the early North American session at 12:30 GMT. The headline CPI is expected to decelerate to 0.5% during the reported month from the 0.9% increase recorded in June. The yearly rate is also anticipated to have edged lower to 5.3% in July from 5.4% previous, which was the biggest monthly gain since August 2008. Core inflation, which excludes food and energy prices, is projected to rise 4.3% in July from a year ago against the 4.5% jump in the previous month – the fastest pace of increase since September 1991.
How Could it Affect EUR/USD?
Friday's blockbuster US NFP report marked another step towards the Fed's goal of substantial further progress in the labour market recovery. A stronger inflation print – the second leg of the Fed's dual mandate – will reaffirm market expectations that the US central bank will begin scaling back its extraordinary monetary stimulus sooner rather than later. This should continue to act as a tailwind for the US dollar and pave the way for a further near-term depreciating move for the EUR/USD pair.
Conversely, a softer reading might force investors to push back the likely timing for policy tightening by the Fed. That said, worries about the potential economic fallout from the fast-spreading Delta variant of the coronavirus might continue to lend some support to the safe-haven greenback. This, in turn, suggests that the path of least resistance for the EUR/USD pair remains to the downside.
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).
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.