US CPI: Headline Likely Higher Propelled by Gasoline Prices - TDS
Research Team at TDS, suggests that higher gasoline prices are expected
to push US March headline CPI up by a fairly firm 0.2% m/m (up 0.175%
m/m at 3 decimal places).
Key Quotes
“This
will mark the fastest monthly pace of headline price gains since
October last year, bringing an end to a prolonged period of subdued
inflation performance. On a year ago basis, the annual pace of headline
consumer price inflation should remain unchanged at 1.0% y/y. However,
with base effects continuing to be unfavorable, the outlook is for some
easing in headline inflation into mid-year.
Core inflation
should be subdued, rising at a relatively modest 0.1% m/m pace (up
0.140% m/m at 3 decimal places), which follows two consecutive 0.3%
monthly advances to start the year.
USD:
Post-Yellen speech, we think inflation data will be a key driver for FX
markets moving forward. As it stands, our forecast for headline and core
inflation should not have much impact on the USD, but the risk we see
is that evidence of sequential pick-up in inflation may still be
interpreted constructively for the USD.
This is especially the
case since price action up until today has leaned bearishly for the USD.
In such a circumstance, we look for USDJPY to grind higher but suspect
sellers may find 110 an attractive entry point. EURUSD and USDCAD will
likely be the major currency pairs to watch as both have demonstrated
significant sensitivities to this particular event.”
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