US core CPI came out at 1.9% y/y and +0.1% m/m, a bit lower than expected. Headline CPI rose 2.1% y/y and 0.3% m/m, bang on expectations. The US was expected to report no in change in the an annual inflation level: 2.1% (headline CPI) or 0.3% month over month in June after 0.4% in May. Core CPI was predicted to remain at 2% y/y and rise 0.2% m/m after +0.3% last time.
The US dollar was firm towards the publication, with EUR/USD sitting at 1.3480, GBP/USD around 1.7050 and USD/JPY at 101.50. The dollar is marginally higher, but not against the euro.
Update: while the moves in GBP/USD and USD/JPY are minimal, EUR/USD reverses the gains and falls deeper, now at 1.3462. The pair dipped below 1.35 earlier and we asked if this time it’s for real.
It is important to remember that while inflation figures carry weight in markets, the Fed focuses on a different number in regards to prices: the Core PCE Price Index, which is seen as a more accurate figure for assessing underlying inflation and future inflation.
Geo-political tensions in Gaza and Ukraine as well as heightened rate hike expectations in the US supported the US dollar.
The US releases another important figure later today. See how to trade the US existing home sales with EUR/USD.
