US Inflation: The Moment of Destiny for the USD

US Inflation: The Moment of Destiny for the USD

What will happen?

The United States will publish the Inflation Rate and Core Inflation Rate, also known as US CPI and Core CPI, on July 13 at 15:30 GMT+3. These indicators show a change in the price of goods and services purchased during the previous month. The main difference between the headline and the core indicator lies in the calculations. The Core CPI excludes food and energy prices due to their volatility.

Why is it important?

Rising inflation in the United States worries traders and investors. Last month, consumer prices in the United States jumped 1%, much higher than the 0.7% forecasted. As for the core CPI, it strengthened by 0.6%. The annual inflation rate hit 8.6%, the highest level since December 1981. With rising fears of a recession, traders pay a lot of attention to the changes in US inflation, as it may push the Fed towards more aggressive monetary policy decisions. Thus, the release greatly impacts the pairs with the US dollar.

Last time, the USD significantly advanced against other currencies on strong inflation figures. As a result, EURUSD dropped. If you traded EURUSD on that day with one lot, you could have earned around $780. 

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How to trade on the US Inflation Rate and Core Inflation Rate?

Wait for the actual figures to appear in the Economic Calendar and compare them with the forecasted ones.

  • If the Inflation Rate and Core Inflation Rate are higher than the forecasts, the USD will rise.
  • If the Inflation Rate and Core Inflation Rate are lower than the forecasts, the USD will fall.

Check the Economic Calendar.

Instruments to trade: EURUSD, USDJPY, XAUUSD.

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