We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
More View more
Real Time News
  • Join Chief Currency Strategist @JohnKicklighter LIVE at 18:45 GMT / 1:45pm ET for coverage of the #FOMC monetary policy announcement and its impact on the US #Dollar as well as the broader financial #markets - https://t.co/booyOJj98p https://t.co/T4uoU7VOo9
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.02%, while traders in US 500 are at opposite extremes with 76.32%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/EBPoxDl8FS
  • Tomorrow brings both an #ECB rate decision along with the UK election, keeping both $EURUSD and $GBPUSD in the spotlight. Get your technical analysis from @JStanleyFX here: https://t.co/b3z1px72nL https://t.co/oDRWPc2RGk
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Silver: 0.73% Gold: 0.45% Oil - US Crude: -0.71% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/2QUsI7shrJ
  • Update on #Cryptocurrencies #BITCOIN -0.40% #BITCOINCASH +0.06% #ETHEREUM -1.35% #RIPPLE +0.32% #LITECOIN -0.83%
  • Gold is moving higher ahead of this afternoon's FOMC meeting $XAUUSD https://t.co/mH1Ve8dd9F
  • genuinely excited for this https://t.co/FNZyu7QtGp
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.83% 🇳🇿NZD: 0.40% 🇨🇦CAD: 0.26% 🇯🇵JPY: 0.06% 🇪🇺EUR: 0.01% 🇨🇭CHF: -0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/tQBbKmNDlP
  • RT @biancoresearch: The Fed is not expected to move rates. Powell is likely to repeat the economy is in a “good place” and get tons of ques…
  • Join @DailyFX and @DailyFXTeam for an all-night UK election market coverage with our very own market expert @JMcQueenFX live-tweeting results and market moves starting today. Need a quick recap before you dive into monitoring the market? Get it here: https://t.co/b3z1px72nL https://t.co/9dyrf0jWe5
US Dollar Maintains Gains as July CPI Report Shows Elevated Inflation

US Dollar Maintains Gains as July CPI Report Shows Elevated Inflation

2018-08-10 13:10:00
Christopher Vecchio, CFA, Sr. Currency Strategist

Talking Points

- Headline July US CPI comes in at +2.9% y/y as expected, but the core CPI reading was above expectations at +2.4%, the fastest reading since September 2008.

- The beat on the inflation report comes as rates markets were already pricing in a 92% chance of a 25-bps rate hike next month by the Federal Reserve.

- The US Dollar was able to maintain its breakout from its two-month consolidation, with the DXY Index holding near its daily highs after the inflation report.

See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

After a mostly positive July US Nonfarm Payrolls report last Friday, the US Dollar (via the DXY Index) had been consolidating below key resistance formed around its yearly highs. But on the back of fresh developments out of Europe regarding banks’ exposure to the Turkish economy, and solidified by another hot inflation report, the US Dollar is positioned at its strongest level in a year.

Headline July US CPI held steady at +2.9% y/y as expected, according to a Bloomberg News survey. With average hourly earnings in at +2.7% y/y, real wage growth has been negative in the United States for a third consecutive month. But core inflation was where attention was focused, coming in at +2.4% y/y versus +2.3% y/y expected. This represents the fastest rate of core inflation since September 2008.

The data comes against the backdrop of a Federal Reserve that was almost already certain to raise rates when it meets next month. The data today has had little impact on already rich rate expectations, with September 2018 Fed rate hike expectations pricing in a 92% chance of a 25-bps before the figures were released; after today’s data, the odds are 94%.

Here are the data driving the US Dollar this morning:

- USD Consumer Price Index (JUL): +2.9% as expected, unch.

- USD CPI ex Food & Energy (JUL): +2.4% versus +2.3% expected, unch.

See the DailyFX Economic Calendar for Friday, August 10, 2018

DXY Index Price Chart: 1-minute Timeframe (August 10, 2018 Intraday) (Chart 1)

US Dollar Maintains Gains as July CPI Report Shows Elevated Inflation

Following the inflation report, the US Dollar was able to sustain its already solid gains on the day. The DXY Index gained from 96.05 to as high as 96.15 following the release, and was trading back at 96.09 at the time this report was written.

Similarly, EUR/USD fell from near 1.1451 to below 1.1439, and USD/JPY gained from near 110.90 to above 111.10 briefly. Focus is likely to quickly return to the new, more potent catalyst on the data, the reaction by the Euro from contagion spreading from Turkish markets.

Read more: DXY Index Hovering Below Fresh Yearly Highs Ahead of July US CPI

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

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


News & Analysis at your fingertips.