Home Daily Commentaries US CPI strengthens the USD

US CPI strengthens the USD

Daily Currency Update

U.S. core CPI, excluding volatile food and energy prices, held steady at 3.2% in August, in line with market expectations. On a monthly basis, both CPI and core CPI increased by 0.2% and 0.3%, respectively, surpassing forecasts. This has reduced the likelihood of a 50-basis-point rate cut by the Federal Reserve, with the market now pricing in an 85% chance of a 25-basis-point cut. The news strengthened the U.S. dollar, driving GBP/USD down from 1.3090 to a session low of 1.3000, and pushing EUR/USD from 1.1050 to 1.1000. Both pairs have seen some recovery since.

Key Movers

Today's focus will be on the European interest rate decision, with the market already expecting a 25-basis-point cut by the European Central Bank. The key driver of volatility will likely be President Christine Lagarde's comments, particularly any guidance on potential rate cuts in October and December. Additionally, U.S. monthly PPI data and unemployment claims are also scheduled for release today.

Expected Ranges

  • GBP/USD: 1.3000 - 1.3110 ▼
  • GBP/EUR: 1.1810 - 1.1880 ▲
  • GBP/AUD: 1.9480 - 1.9640 ▼
  • EUR/USD: 1.0980 - 1.1100 ▼

Written by

Alex Hartley

OFXpert

Driven by a passion for currency markets and data movement, Alex finds great appeal in the dynamic nature of the industry. With over 20 years of experience, Alex works closely with businesses to understand their foreign exchange requirements and align them with solutions. Placing a strong emphasis on customer service, he takes pride in nurturing long-lasting relationships with clients.