Summary:

• Core CPI M/M +0.3% vs +0.2% exp and +0.1% prior
• Core retail sales M/M +0.4% vs +0.3% exp and 1.0% prior
• USD moves off its lows following the release

Today’s CPI data was earmarked by some traders as a final hope for the US dollar and whilst the release wasn’t unequivocally positive it has provided some positivity. The headline reading of +0.1 M/M was in line with forecasts but the all important core figure rose more than expected to +0.3% from +0.1% previously.

 

 The CPI Y/Y came in inline with expectations at +2.1% but the core reading beat forecasts. Source: xStation

At the same time we also got the retail sales numbers for December which similarly to the CPI reading showed a slight miss  on the headline print but a beat on the core. In M/M terms this came in as 0.4% for both the headline and the core reading against forecasts of 0.5% and 0.3% respectively.

 Retail sales figures fell back for the headline reading but the core beat expectations to rise higher. Source: xStation

The market reaction has seen a move higher in the US dollar with the buck moving off its lowest level since early September on a trade weighted basis. The USDIDX (USD index) has earlier threatened to take out the previous low of 90.98 and this is now a key level to watch for support. 

 The USDIDX has bounced off potentially key support around 91 following the release. This is now a key level to watch for support. Source: xStation