The US consumer price index for September will be released today. Prior to that, the market was dominated by a stronger dollar. The dollar/yen exchange rate is hovering around the 147 yen level amid growing concerns over yen-buying interventions. The pound-dollar market is in turmoil over the Bank of England’s temporary purchase of long-term bonds due on the 14th, ahead of the announcement of the medium-term financial plan and the OBR economic forecast on the 31st of this month. However, the pound-dollar pair seems to be moving up and down around the 1.10 level despite its volatile price movements. EURUSD is hovering around 0.97, parity levels are far away. In general, the dollar is trending at a strong level.
The noteworthy US consumer price index is expected to increase by 8.1% year-on-year. Growth is expected to slow down from the previous +8.3%. The core year-on-year growth is expected to be +6.5%, and the growth is expected to accelerate again from +6.3% in the previous survey.
The point is probably the market sentiment ahead of the announcement. When the data was last released in August, the market had strongly priced in slowing inflation growth. It is still fresh in our minds that the market strengthened its reaction to dollar-buying as a surprise when the year-on-year rate of change exceeded expectations. In fact, growth has slowed down since last year.
“What about this time?” It is believed that the year-on-year increase in core sales is expected to increase since the decline in gasoline prices has stabilized. The key point is to what extent the year-on-year slowdown in the headlines is factored in. Reflecting on the previous overestimation, it is assumed that this time it will be quite neutral.
One of the concerns of the market is whether it will trigger the BOJ’s yen-buying intervention. Finance Minister Suzuki seems to be focusing more on the speed of change than on the level. In that sense, there is a strong speculation that if the US consumer price index strengthens, the US dollar’s sharp rise will trigger the BOJ’s intervention. Conversely, if weaker numbers emerge and the dollar plummets, it is assumed that intervention will be held back. The problem will be if the results are moderately firm and the dollar is gradually bought even after the announcement of the indicators. It is quite difficult to get the chance to intervene at the Bank of Japan.
The US consumer price index will be announced at 9:30 pm Japan time. At the same time, the number of U.S. unemployment claims for the previous week will also be released.
First, after the US Consumer Price Index (CPI) at 21:30 today, we would like to follow the flow of the USD.