Tomorrow will be the week’s featured event, the release of the US consumer price index for July. The market expects growth to slow down from +9.1% in the previous year to +8.7% year-on-year. The month-on-month rate of increase is expected to be +0.2%, a significant slowdown from +1.3% in the previous month. This is believed to be the result of lower gasoline prices. On the other hand, the core index, which excludes energy and food, is expected to accelerate further from +5.9% in the previous year to +6.1% from the previous year. The core month-on-month growth is expected to slow down slightly from +0.7% in the previous month to +0.5%. It remains to be seen how the market reacts with this set of forecast numbers in mind.
According to the CME FedWatch in advance, the rate hike at the next September FOMC meeting is priced at 37.5% for 50bp and 62.5% for 75bp. Last week’s strong U.S. jobs data raised expectations for a 75 basis point hike, but just under 40% expect a 50 basis point hike. As for tomorrow’s US consumer price index, it seems that the slowdown in headline growth from the previous year seems to be weighing heavily.
The dollar index trend has been calm over the past week. The depreciation trend of the dollar in the second half of July has come to a halt, and the dollar is showing some reluctance to fall. Eurodollar, a representative currency pair, has formed a range from 1.01 to around 1.03, confusing the direction of the dollar exchange rate. There are trends such as a strong dollar against the dollar, a strong dollar against the pound against the dollar, and a weak dollar against the Australian dollar/dollar, so the direction of the dollar itself is not clear. It is expected that the direction will become clearer depending on the results of tomorrow’s US consumer price index. However, it’s summer vacation time, so is it sometimes difficult to flow? Markets are likely to turn their attention to the next speech by Fed Chair Jerome Powell at Jackson Hole.
Ahead of tomorrow’s US consumer price index, it is assumed that the flow will be difficult today. Development that is difficult to move in either direction. Current position is sell EURUSD only.