Home Daily Commentaries US consumer prices jump due to gas price surge

US consumer prices jump due to gas price surge

Daily Currency Update

The US dollar Index (DXY) strengthened slightly after the Consumer Price Index (CPI) data release, hitting a max of 104.966. It has since settled again, currently sitting in the 104.678 range. US consumer prices have jumped according to the recently released CPI which shows a 0.6% rise month-over-month. This was in line with forecasts but well above the previous 0.2% rise. It was reported that the index for gasoline was the largest contributor to this surge in prices, accounting for over half of the increase. This is the largest gain since June 2022. Year-over-year CPI increased 3.7%, above the forecasted 3.6% and well above the previous 3.2%. The Core CPI month-over-month rose slightly at 0.3% which was still above the forecasts and previous rise of 0.2%. Core inflation came in at 4.3% year-over-year, mostly on par with the anticipated 3.6% and the previous 3.2%. Markets have slightly increased the probability of the Federal Reserve hiking rates later this year after the release of today’s data.

Key Movers

In the Eurozone year-over-year industrial production has dropped 2.2%, significantly more than the expected 0.3% drop. Italian quarterly unemployment rate was reported at 7.6%, below the forecasted 8% and the previous 7.9% level.

UK yearly Gross Domestic Product (GDP) for July came in at 0%, worse than the forecasted 0.4% and the previous 0.9% level. The UK GDP month-over-month dipped 0.5%, more than the anticipated -0.2% and the previous 0.5% increase. This report was surprising as this contraction was the quickest pace in 7 months. The UK economy seems to be slowing with the high interest rate weighing heavily on growth. This has caused the GBP to dip to its lowest level against the USD since June. Market expectations that the Bank of England (BoE) will raise interest rates by 0.25% later this month remain unchanged after the GDP data release.

The Canadian dollar is up slightly against the USD today, hitting a high of 0.7387 and currently trading at 0.7376. West Texas Intermediate (WTI) oil hit a high of 89.60 this morning, but at the time of writing has dropped slightly (-0.15%) from yesterday’s close to 88.62. The Loonie may be boosted by these high oil prices.

Expected Ranges

  • EUR/USD: 1.07107 - 1.07649 ▼
  • GBP/USD: 1.24331 - 1.25117 ▲
  • AUD/USD: 0.63801 - 0.64331 ▼
  • USD/CAD: 1.35354 - 1.35869 ▲