Some pressure on US yields and USD if inflation expectations are met – Scotiabank
13.09.2023, 11:33

Some pressure on US yields and USD if inflation expectations are met – Scotiabank

Markets are trading defensively and the USD is firmer ahead of today’s US CPI report. Economists at Scotiabank analyze Greenback’s outlook.

Sticky inflation in the US

Headline prices are expected to rise 0.6% in August month for a 3.6% rise over the year (up from 3.2% in July). But higher gasoline prices are behind the anticipated rise in headline data. 

Core prices are expected to show a bit more discipline, rising 0.2% in the month and falling to 4.3% (from 4.7%) in the year. There is still work to do on inflation but a third, consecutive monthly gain of 0.2% would be the lowest run of monthly core price gains since late 2020 and would surely be welcomed by policymakers as a sign that price growth is moderating. 

Low core prices might be the focal point for markets rather than the push higher in headline data which policymakers seem likely to look through in terms of immediate policy implications. Some pressure on US yields and the USD may result if consensus expectations are met.

Technically, the broader USD tone is likely to reflect whether the DXY can rise through 105 or push back under 104.50 support after the data. 

 

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