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10/06 USD CPI: What To Expect

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Look out traders! On Thursday the 10th of June, the US will be printing their CPI data so here's what to expect...

The USD Consumer Price Index (CPI) report measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care.

The US also publishes a "Core" CPI, which removes volatile items such as food and energy prices.

Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

Quick Summary of Previous Report:

  • CPI m/m = 0.8% vs 0.2% expected
  • Core CPI m/m = 0.9% vs 0.3% expected
  • CPI y/y = 4.2% vs 3.6% expected
  • Core CPI y/y = 3.0% vs 2.3% expected

Consumer prices jumped by 0.8% from March and a massive 4.2% from a year ago in April, the fastest annualised increase since September 2008. This mostly came from semiconductor shortages, business re-openings, and other supply constraints that boosted the prices of used cars (up 10%) and other vital goods.

The Fed had expected price increases, but the surprisingly high numbers had inspired talks of tapering for the Fed and boosted the US dollar higher.

What's Expected Now:

  • CPI m/m = 0.5% vs 0.8% previous
  • Core CPI m/m = 0.6% vs 0.9% previous
  • CPI y/y = 4.7% vs 4.2% previous
  • Core CPI y/y = 3.2% vs 3.0% previous

Analysts are expecting price increases to slow down from 0.8% to 0.5%, with core prices also easing from 0.9% to 0.6%. However, leading indicators support faster price increases:

Manufacturing PMI noted that supply chain disruptions and backlogs have led to the “fastest rises in input rises” on record and that manufacturers are passing it on “at an unprecedented rate".

Impact on USD/JPY:

If the data comes out better than expected, we will likely see price continue this ascending channel trend and make a move to the upside, bouncing off the channel's bottom. However, if we see the report come out worse than expected, so below the predicted figures, it is likely we will see price break this trend and make a move to the downside.

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