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Consumer Price Index Flat in December; U.S. Dollar Little Changed

Consumer Price Index Flat in December; U.S. Dollar Little Changed

Trang Nguyen,

THE TAKEAWAY: U.S. Consumer Price Index was Flat in December> Decline in Energy Price Offset Increases in Food Prices & Other Goods > U.S. Dollar Little Changed

U.S. inflation eased for the second month on lower energy price in December; consistent with Federal Reserve official’s view that outlook for inflation was “pretty good” and might fall below 2 percent in the first half of 2012. The seasonally adjusted consumer price index for all urban consumers remained unchanged in December, the U.S. Bureau of Labor Statistics reported today. The reading missed consensus forecast of 0.1 percent increase, according to Bloomberg News survey. From twelve months earlier, the index edged up 3.0 percent compared to 3.4 percent in the previous month. The less volatile figures, excluding food and energy, rose 0.1 percent on a monthly basis and 2.2 percent on a yearly basis, matching with economists’ expectations. A producer price index report released yesterday also revealed cooling inflationary pressure on the U.S. production line in the last month of year 2011.

U.S. Consumer Price Index (YoY): January 2010 to Present

011912_US_Consumer_Price_Index_December_body_Chart_1.png, Consumer Price Index Flat in December; U.S. Dollar Little Changed

Prepared by Trang Nguyen

The Consumer Price Index came in flat in December as decline in energy price offset increases in other goods and services costs. The gasoline index fell for the third consecutive month in December, as did household energy index. Specifically, gasoline price plunged 2.0 percent while fuel oil dropped 1.0 percent. In contrast, food prices moderately rose 0.2 percent in December after moving up 0.1 percent in November and October. Besides, the index for all items less food and energy increased 0.1 percent in the month on higher prices of medical care, shelter, recreation and tobacco.

The Consumer Price Index climbed 3.0 percent in 2011, following 1.5 percent advance in 2010. The energy index decelerated at the pace of 6.6 percent in 2011 compared to 7.7 percent in 2010. On the contrary, the index for food accelerated in 2011, soaring 4.7 percent compared to 1.5 percent gain in the previous year. Also, the index for all items less food and energy speeded up at 2.2 percent in comparison with its historical low 2010 increase of 0.8 percent.

USD/CAD 1-minute Chart: January 19, 2012

011912_US_Consumer_Price_Index_December_body_Picture_1.png, Consumer Price Index Flat in December; U.S. Dollar Little Changed

Charts created using Strategy Trader– Prepared by Trang Nguyen

The U.S. dollar traded mixed ahead of the North America trading session today. The greenback strengthened versus the Japanese Yen and high-yielding currencies but weakens versus most of other major peers. The U.S. traded little changed following the inflation data release. As can be seen from the one-minute USDCAD chart above, the currency pair fluctuated in the narrow range between 1.0070 and 1.0085 within an hour. The Relative Strength Indicatorlying between the 30- and 70-level indicated neither overbought nor oversold market reactions regarding to the currency pair. At the time this report was written, a dollar trades at $C1.00806.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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