Summary:

• US CPI M/M for August +0.4% vs +0.3% exp
• Core reading also rises. +0.2% from +0.1% prior
• Gold falls to weekly low; USDJPY trades 111

Inflation in the US economy is picking up according to the latest economic release with the CPI M/M showing a 0.4% increase for the month of August. This rise represents the biggest jump since January and ends a run of 5 consecutive misses for this data point. A rise to 0.3% was expected after a marginal increase of 0.1% was seen last time out, so today’s print could be described as something of a positive surprise. 

 

 Both the CPI and core CPI for the US have risen in the month of August, potentially signalling the end of a recent run of weakness. Source: xStation

The core reading is sometimes viewed as more important with its proponents believing that it offers a fairer reflection of the inflationary pressures in the underlying economy. The core CPI M/M increased to 0.2% from 0.1% previously, coming in inline with consensus forecasts. 

The data on the whole is mildly positive for the US dollar, although it probably isn’t strong enough to be a major game-changer. The Greenback has extended its recent gains today, rising against the majority of its peers, barring the GBP which soared after the BoE meeting.    

 USD has added to its recent gains today, with the buck receiving another boost after a rise in CPI. Source: xStation 

Gold has experienced some volatile trade since the release, with price falling to its lowest level in a month before staging a recovery. The better than expected CPI is seen as positive for the USD and therefore negative for Gold but another news story since the data has supported the market. Japanese news agency the Nikkei have reported that North Korea is said to be “showing signs of missile launch prep.”

 Gold prices fell after the release but rumours of further North Korean missile launches have seen buyers step in. Source: xStation