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17 Apr 2015
US core inflation might slip slightly – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities maintain their bearish outlook on US data, expecting US core inflation to slip to 1.6% yoy and USD to fall further to the downside.
Key Quotes
“The USD continues to trade heavy and we do not think it will let up just yet….we still expect US data to surprise to the downside in the near-term.”
“Today is no different where we expect CPI (March) and the Michigan confidence survey (preliminary estimate for April) to print below consensus estimates. For CPI, we expect core inflation to slip to 1.6% y/y instead of holding steady at 1.7% y/y where consensus sits.”
“While one may think that the difference here is minor (just one-tenth of a percentage point), but with the way FX markets have been trading this week a slight disappointment will have an asymmetric impact on the USD.”
“Additionally, core inflation has become magnified since the Fed needs to be ‘reasonably confident’ that underlying price pressures will sustainably trek towards target in order to begin normalizing rates; we do not think this will to unfold until later in Q3.”
“We would also keep a keen eye on the confidence survey (released at 10AM) given the mixed bag of leading surveys thus far. We would look to fade USD rallies should the data surprise to the upside.”
Key Quotes
“The USD continues to trade heavy and we do not think it will let up just yet….we still expect US data to surprise to the downside in the near-term.”
“Today is no different where we expect CPI (March) and the Michigan confidence survey (preliminary estimate for April) to print below consensus estimates. For CPI, we expect core inflation to slip to 1.6% y/y instead of holding steady at 1.7% y/y where consensus sits.”
“While one may think that the difference here is minor (just one-tenth of a percentage point), but with the way FX markets have been trading this week a slight disappointment will have an asymmetric impact on the USD.”
“Additionally, core inflation has become magnified since the Fed needs to be ‘reasonably confident’ that underlying price pressures will sustainably trek towards target in order to begin normalizing rates; we do not think this will to unfold until later in Q3.”
“We would also keep a keen eye on the confidence survey (released at 10AM) given the mixed bag of leading surveys thus far. We would look to fade USD rallies should the data surprise to the upside.”