Live Coverage: US CPI inflation critical for Fed decision, to rock Gold, stocks and the US Dollar
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UPGRADEThe Fed will cut rates, but by how much? The all-important CPI report for August comes one week before the announcement, and has a critical role in shaping it. Gold, stocks and the US Dollar are set to rock. Live coverage.
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CPI inflation comes as investors fear a downturn
Headline inflation will likely fall to the lowest since 2021 – energy and food price rises have fallen. What matters for markets is the core Consumer Price Index (core CPI) which excludes these volatile items. Given the softer labor market, wage growth is also slowing, putting a lid on prices of services.
At current inflation levels of above the Federal Reserve's 2% target, a drop is a blessing. However, lower price rises may come to reflect a weak economy – as seen in China, which is experiencing deflation in producer prices.
The Federal Reserve is set to cut interest rates on September 18 – Fed Chair Jerome Powell clearly stated that. Nevertheless, uncertainty stems from the size of the cut – a standard 25 bps move or a double dose of 50 bps, which markets desire.
Lower inflation means a greater chance of a 50 bps cut, and that would boost Gold and stocks, while weighing on the US Dollar. Higher inflation would buoy the Greenback, while weighing on Gold and equities.
Core CPI MoM is the key figure to watch, and the economic calendar points to an increase of 0.2% in August, a repeat of July's figure.
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The Fed will cut rates, but by how much? The all-important CPI report for August comes one week before the announcement, and has a critical role in shaping it. Gold, stocks and the US Dollar are set to rock. Live coverage.
Join FXStreet Premium to ask analysts questions live, leverage actionable analysis and get Gold and signal alerts.
CPI inflation comes as investors fear a downturn
Headline inflation will likely fall to the lowest since 2021 – energy and food price rises have fallen. What matters for markets is the core Consumer Price Index (core CPI) which excludes these volatile items. Given the softer labor market, wage growth is also slowing, putting a lid on prices of services.
At current inflation levels of above the Federal Reserve's 2% target, a drop is a blessing. However, lower price rises may come to reflect a weak economy – as seen in China, which is experiencing deflation in producer prices.
The Federal Reserve is set to cut interest rates on September 18 – Fed Chair Jerome Powell clearly stated that. Nevertheless, uncertainty stems from the size of the cut – a standard 25 bps move or a double dose of 50 bps, which markets desire.
Lower inflation means a greater chance of a 50 bps cut, and that would boost Gold and stocks, while weighing on the US Dollar. Higher inflation would buoy the Greenback, while weighing on Gold and equities.
Core CPI MoM is the key figure to watch, and the economic calendar points to an increase of 0.2% in August, a repeat of July's figure.
Live financial market coverage
FXStreet covers major economic releases in a live blog format, to provide readers an instant verdict of the data, rapid analysis of key assets, and for Premium members, the abilty to ask our experts questions in real time.
FXStreet Premium
FXStreet Premium provides subscribers access to analysts, exclusive actionable analysis, signals, Ed Ponsi's webinars, trade plans and a bullish/bearish indicator for Gold on critical events. Join FXStreet Premium here.
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