The US dollar currency has fallen sharply after the US CPI number came in lower than expected earlier today, which is helping to perpetuate the notion that inflation has “peaked”.
Breaking down the figures, CPI inflation came in at 8.5% year-on-year, which was better than the 8.7% anticipated. Although it was notably higher than the 8.3% last month.
CPI inflation came in at 0.0% month-on-month vs +0.2% expected. The main relief was that it was a significant drop from the +1.3% during the previous month, which spooked market last month.
Core CPI figures from July really caught the markets attention as it dropped to 5.9% year-on-year vs 6.1% expected and of course the previous months reading of 5.9%.
President Biden has been on the worse talking up the CPI report today. Biden noted that “we’re seeing some sign that inflation is moderating” and “Our work is far from over.”
Biden also said that “We expect headwinds ahead, but the situation is improving”. The market may have overlooked his comments as the reaction was instantaneous today in terms of the expected moves.
Perhaps the main market reaction is in the US dollar currency. The greenback has lost substantial ground, and the EURUSD pair is leading the gains right now at 1.0350.