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Today's release of Consumer price index (CPI) numbers will be most watched by traders and investors. CPI is scheduled to be released at 12:30 GMT.
Why important?
- FED's dual mandate is price stability and maximum employment. However, Unemployment rate has now reached 5.5% in US, which is considered as very close to long term level. That leaves inflation to be most vital for first rate hike as well as path.
Past trends -
- CPI fell to negative territory in later half of 2014. In January CPI fell by -0.7%, mostly due to lower energy prices. CPI fell by -0.1% YoY.
- Core CPI so far has managed to keep its head above zero throughout last year. Core CPI grew by 0.2% in January and 1.6% YoY.
Expectation today -
- CPI is expected to rise by 0.2% mom and -0.1% yearly basis.
- Core CPI is expected to
remain subdued but positive growing 0.1%.
Impact -
- FOMC participants has reduced flashed their forecast for inflation in 2015 last week, however weaker data is not expected to bode well for US dollar and treasury yields.
- Market participants might push rate hike expectation further, should the core CPI fall below zero bound.
Dollar index is currently trading at 96.8, down 0.2% today.
