As expected, the consumer prices report set the tone for the US dollar early on in the New York morning. It wasn?t industrial production, TIC or even current account that set the day?s theme, it was inflationary pressures.
Forever a harbinger of interest rate decisions to come, it seems that the report quells some speculation, at least for now, that rate hikes are in the foreseeable future. For the month, consumer prices rose better than the 0.6 percent consensus. However, dealing the dollar a death blow, core figures pared back, rising by only 0.1 percent. With slow but stable growth likely, inflationary pressures will come in line and keep pace with overall economic expansion. As a result, rate hikes will no longer be needed in calming what some deem as uncontrollable consumer prices. Confidence in this notion was more than evident as the US dollar fell the most in almost two months against the Euro, dropping against the British pound as well. Subsequently, next week doesn?t look be any better as momentum from today?s report will likely emanate along with the dearth of US data scheduled.