This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
How Will Consumer Price Indexes Affect USD?
What will happen?
US consumer price indexes (CPI) will be announced at 15:30 MT (GMT+3) on Wednesday, August 11.
The headline indicator presents the price change of goods and services purchased by consumers. The core indicator is based on the same data excluding food and energy, as prices of these goods are highly volatile. The indexes are based on the average price of various goods and services that are sampled and then compared to the previous sampling. Traders and investors look closely at these data as consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices make the central bank raise interest rates.
Last time the actual result was higher than expected, and USD gained 0.71% versus the EUR.
Consumer price index
How to trade on CPI indexes?
- If the consumer price index is greater than the forecast, the USD is likely to strengthen against other currencies.
- If the consumer price index is lower than the forecast, the USD is likely to weaken against other currencies.
Instruments to trade: EUR/USD, USD/CAD, AUD/USD.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
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The RBA and the Bank of Canada will add volatility to the AUD and the CAD, while USD is expected to be boosted by the Non-farm payrolls.