Baxia Markets
July 13, 2021

US Inflation Peaks?

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Here is one thing you need to know before opening bell today, July 13th. Today we see both US CPI and Core CPI releases. Set your alarms because this is important.


12:30PM (GMT) - CPI m/m

12:30PM (GMT) - Core CPI m/m



What is it? 


The Consumer Price Index is released by the US Bureau of Labor Statistics and is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. Essentially it attempts to quantify the aggregate price level in an economy and measure the purchasing power of a country's unit of currency. The CPI is a key indicator to measure inflation and changes in purchasing trends. 


On the other hand, we have Core CPI. In basic terms, while Core CPI (Consumer Price Index) and regular CPI are nearly identical, it is important to note that Core CPI excludes food and energy. One factor that makes Core CPI an important statistic is that it looks at price change from the consumer's perspective. It is a crucial way to measure changes in inflation and purchasing trends. The m/m means month to month. 



What are the Expectations for the USD - CPI m/m & Core CPI m/m?


With this release right around the corner, we take a look at what the expectations are for this release and what it means. The expected figure for CPI is 0.5% compared to the previous figure of 0.6%. The expected figure for Core CPI is 0.4% compared to the previous figure of 0.7% 



Professional Insight


“We’re almost in this environment where good news is bad news and bad news is good news,” said David Meger, Director of Metals Trading at High Ridge Futures, when referring to the CPI data and how it impacts Fed policy. 


“If inflation data becomes more benign, the Fed would feel slightly less inclined to ease its asset purchases which should benefit gold, but if they are concerned about inflation, they’re more likely “to tap the brakes” on such purchases, weighing on gold,” Meger added.



What happens if...


We see a higher number than 0.5% and 0.4% respectively? That is typically a good sign for the US Dollar. However, if the number is way higher than expected, then there could be negative implications. 


What happens if...


We see a lower number than 0.5% and 0.4% respectively? That is typically not a good sign for the US Dollar. We also do not want to see a number that is way lower than 0.4% and 0.5%, especially not in the negatives as we all know deflation is not ideal in the long term. 



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