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Greenback Bounces on Inflation Data | Trump – “The Wall Will Come Later”

Published September 14, 2017

The U.S. Department of Labor published August employment and inflation data this morning, which showed unemployment claims lower than expected (284K vs. 303K) and the Consumer Price Index advancing by 0.4%, beating the 0.3% forecast. Core inflation (excluding food and energy) came in on target at a 0.2% increase. Due to the exclusion of the more volatile prices of food and energy, the Federal Reserve tends to consider Core CPI as a better gauge of inflationary pressures. Markets remain skeptical about the Fed increasing rates further in 2017 due to worries over a soft inflationary outlook, but today’s data caused USD to bounce up ~0.30% to 1.2207 (9:40AM EST)

Analysts agree that U.S. economic growth will take a mild hit this quarter because of Hurricane Harvey having battered Texas, though according to a Reuters poll the outlook for 2018 remained steady, indicating output will likely be deferred but not lost. Hurricane Harvey killed over 60 people, displaced 1 million more, and the governor of Texas said the storm caused $180 billion in damage

Across the pond the Bank of England decided to hold interest rates at a record low of 0.25%, as expected, as well as not to make any changes to its Asset Purchase Program/QE. The minutes from the BoE meeting showed that all members believe future rate hikes will be faster than markets are currently pricing in, should economic conditions develop as they are forecast to in August. GBP/CAD is currently up 1.44% to 1.6303 (9:40AM EST) post-announcement

Oil continued higher this morning on a report from the International Energy Agency stating that in August global oil supplies fell for the first time in four months. This data was released the day after an OPEC report showed oil production from member countries fell in August for the first time since March. U.S. WTI crude is up 1.48% to $50.03 (9:40AM EST), with Brent up 0.96% to $55.69 (9:40AM EST)