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).
“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.”