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The Bureau of Labor Statistics (BLS) in the US is going to release the most recent findings regarding the recorded changes in the inflationary pressures in the country for September.
Presently, the 12-month Consumer Price Index (CPI) for all items is at 1.7 per cent, before seasonal adjustment. The inflation rate registered a 0.1 per cent depreciation in August from the recorded 1.8 per cent in July.
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The recent tumble was received negatively by the markets, as the recorded weaker price stability is indicative of insufficiently accommodative monetary policy. Thus, investors started weighing in on the possibility of additional interest rate cuts by the end of 2019.
In its last report, the BLS attributed the tumble in inflation mostly to the observed decline in the energy sector, which in turn was caused by falling gasoline prices.
“Increases in the indexes for shelter and medical care were the major factors in the seasonally adjusted all items monthly increase, outweighing a decline in the energy index. The energy index fell 1.9 percent in August as the gasoline index declined 3.5 percent. The food index was unchanged for the third month in a row.”
The price of natural gas rose by roughly 15 per cent during the first two weeks of September before correcting some of the gains in the latter part of the month.
Regardless, the hike in the prices is expected to have stimulated the energy index positively this time, which in turn can be anticipated to boost the all-items CPI index.
The consensus forecasts are for the monthly adjusted CPI index to appreciate by 0.1 per cent in September, which means that the overall inflation rate is likely to rise marginally.
Jerome Powell and his colleagues in the FOMC will be anticipating the release of the report as well since it is of pivotal importance for the monetary policy in the country.
If its findings disappoint for the second consecutive month, the FED would be given additional incentives to cut the interest rate and implement a more accommodative monetary stance.
Meanwhile, this week’s session opened relatively quietly, and the EURUSD is still trading within the short-term price range, that was outlined in our market update from the 30th of September.
The anticipated heightened volatility on Thursday, resulting from the release of the CPI report, is expected to cause the pair to test the strength of the range’s boundaries. The lower-support level is at 1.09250, and the upper-resistance level is at 1.10000.
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