US inflation came out above expectations: unchanged m/m and 1.7% y/y. Core inflation rose 0.2% and 1.8% y/y. All the numbers are 0.1% above expectations. Weekly jobless claims are at 291K, worse than expected. Continuing claims are at 237.43K
The US dollar is stronger after the publication, despite the small disappointment in jobless claims. The greenback is slightly stronger across the board.
Jobless claims are a disappointment, with an upwards revision to 293K. These numbers raise the 4 week moving average. Nevertheless, it’s the 10th straight week of claims under 300K.
Core prices have risen the most in 5 months, and this is what matters for the Fed.
EUR/USD is sliding in range towards 1.25, GBP/USD is getting further away from 1.57 and USD/JPY may have ended its intra-day slide.
Background
The US was expected to report a monthly drop of 0.1% in prices and a slide in y/y inflation from 1.7% to 1.6%. Core inflation, which is more important to the Fed, is expected to rise by 0.1% m/m and remain at 1.7% y/y. Jobless claims are predicted to drop to 285K this week, from 290K last week (before revisions). Continuing claims carry predictions for 2.37 million.
The dollar was on the back foot, losing some of its previous gain: EUR/USD traded within range around 1.2535, GBP/USD at 1.5680, USD/JPY at 118.20, USD/CAD at 1.1325, AUD/USD just above 0.86 and NZD/USD around 0.7850.
Before sliding, the dollar was generally boosted by the not-too-dovish FOMC meeting minutes. While they were somewhat worried about falling inflation expectations and about global growth, they did not see a big impact on the US economy. And while leaving the “considerable time†phrase was widely agreed upon, so was the end of QE.
If this bulk of data wasn’t enough, we have more: Markit’s manufacturing PMI, existing home sales and the Philly Fed Index.
More: What’s Next For USD Bull Market, EUR/USD, & USD/JPY? – Goldman
