US CPI fails to hamstring the mightly US dollar

Here is what you need to know for 15 Sep in forex:

The US dollar was a solid performer on Tuesday and rose from a low 92.33 to a high of 92.68 against major currencies measured by the DXY index. However, data showed a less-than-expected rise in US inflation last month, creating uncertainty about the timing of the Federal Reserve’s tapering of asset purchases. 

The S&P 500 was down 0.57% while the Dow Jones was down 0.84% by the close. In Europe, the Euro Stoxx 50 lifted 0.1% but the FTSE 100 fell 0.5%. The US 10-year was 6bps lower at 1.27%. The CRB index was up 0.15%.

Data on Tuesday showing the US consumer price index, excluding the volatile food and energy components, edged up just 0.1% last month has raised doubts about tapering this year, some analysts said.

August’s core CPI rise was also the smallest gain since February and followed a 0.3% rise in July. The so-called core CPI increased 4.0% on a year-on-year basis after gaining 4.3% in July. The Jobless Claims was watched and reduced by 58,600 in August. The 3-month average unemployment rate eased to 4.6% in July (from 4.7%).

The greenback is holding in positive territory after several Fed officials have recently spoken and suggested that the US central bank should reduce its buying of debt securities by the end of the year. Markets are awaiting the Fed that will hold a two-day monetary policy meeting next week looking for clues as to when a tapering announcement will be made.

Meanwhile, the euro flat against the dollar at $1.1807 into the close and stayed within a 45 pip range. The Aussie dollar was last down 0.7% vs the greenback at 0.7319 to a two-week low. In cryptocurrencies, bitcoin was last up 3.1% at $46,400 and Ether changed hands at $3,344. Oil prices fluctuated but the WTI is virtually unchanged at $70.48/bbl. Gold rose 1.0% to $1,803.93/oz.

For the day ahead, we have the New Zealand Current account for the second quarter. Chinese Industrial Production and Retail Sales are also due. Australia – Westpac Consumer Confidence Index for September will also be watched as well as the Japnese Tankan Survey.