The July US consumer price index announced yesterday was +8.5% year-on-year, a significant slowdown from +9.1% in June last time. Market expectations were around +8.7%. The core year-on-year growth rate remained at the same level as the previous year at +5.9%, falling short of market expectations of +6.1%. The market was flooded with dollar-selling reactions as US bond yields plummeted. In particular, the dollar/yen pair fell from around 135 yen to just before breaking the 132 yen level. In the CME FedWatch, the 0.50% interest rate hike at the September FOMC meeting progressed rapidly, and there was a scene where it exceeded 70%.
However, the dollar/yen was reluctant to fall after that, as it was somewhat overdone. In the Asian market today, the price is making a comeback high at the 133.31 level. The current rate hike of 0.50% is priced at 58.5%. More than 40% are still factoring in an interest rate hike of 0.75%.
The rice producer price index will be announced today. It will also release the number of U.S. unemployment claims. The producer price index is expected to follow the same trend as yesterday’s consumer price index. The year-on-year growth is expected to slow down to 10.4% from the previous 11.3%, and the core year-on-year growth is expected to slow down to 7.7% from the previous 8.2%. However, the slowdown in growth itself seems to have already been assumed by the market based on the results of the US consumer price index on the previous day. Unless there is a significant slowdown, it is possible that there will be a move to adjust the dollar’s depreciation on the previous day.
On the other hand, we would like to keep an eye on trends in the number of new applications for unemployment insurance. From the latter half of February to the end of April, the level of less than 200,000 people had become normal. It showed the recovery of the labor market. However, since May, the number of cases has gradually increased. The market expects this number to continue on an upward trend. Unemployment insurance is likely to show that improvement in the labor market has plateaued. If the dollar rises sharply, there is a possibility that dollar selling will reignite, so we should be careful. At 9:30 p.m. Japan time, the market is likely to react to both prices and the labor market.
We believe that the aftermath of yesterday’s consumer price index’s slowdown in inflation will continue, and we assume that the dollar will continue to sell today.
Buying of GOLD has stopped out, but US stock S&P500 (CFD) and AUDUSD continue to buy.