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US Import Prices Drop 3%, Supports Case For Fed Rate Cut On October 29
Friday, 10 October 2008 12:36:35 GMT  |  Terri Belkas, Currency Strategist
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US import prices fell by 3 percent during the month of September, according to the Labor Department, as a stronger dollar helped to bring down costs. Indeed, the import price index was led by a 9 percent drop in petroleum import prices, along with broad declines in food and industrial product prices. This is in line with the Federal Reserve's more dovish outlook, as Fed Chairman Bernanke's commentary on Tuesday suggested inflation pressures should cool down, allowing them to take part in the coordinated rate cuts on Wednesday. Furthermore, fed fund futures are pricing in at least another 25bps worth of cuts on October 29 to 1.25 percent, which could put some pressure on the US dollar. Nevertheless, the greenback remains strong this morning amidst lingering risk aversion, as DJIA futures signal a sharp decline when the markets open.

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Source: Bloomberg

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