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15 May 2015
US IPC the higher, the better for the USD - Commerzbank
FXStreet (Córdoba) - Near-term concerns about the health of the US economy have not abated this week. Next week, all eyes will be back on inflation data. According to Lutz Karpowitz, analyst at Commerzbank, the higher the release, the better for the greenback.
Key Quotes
“EUR/USD exchange rates around 1.12 are an indication that fears regarding the US economy prevail on the currency market, despite the solid labour market report for April. Recent euro zone data came in fairly decent: Real GDP at least grew by 0.4% in the first quarter. However, sound euro zone data hardly provide an argument for higher EUR/USD levels”.
“To do the trick, they would have to be good enough to trigger real speculation that the ECB will prematurely end its bond buying programme (i.e. before September 2016). Yet such a scenario is still a long way off”.
“The focus thus remains on the Fed. Next week’s upcoming property market data are unlikely to provide any clues about the current situation. And as regards consumer price data, the situation has been clear for some months anyway: The Fed would like to see a higher rate of inflation”.
“As for CPI data: The name of the game for the USD is the higher, the better. After all, rising inflation would be an argument for interest rate hikes as soon as this year”.
Key Quotes
“EUR/USD exchange rates around 1.12 are an indication that fears regarding the US economy prevail on the currency market, despite the solid labour market report for April. Recent euro zone data came in fairly decent: Real GDP at least grew by 0.4% in the first quarter. However, sound euro zone data hardly provide an argument for higher EUR/USD levels”.
“To do the trick, they would have to be good enough to trigger real speculation that the ECB will prematurely end its bond buying programme (i.e. before September 2016). Yet such a scenario is still a long way off”.
“The focus thus remains on the Fed. Next week’s upcoming property market data are unlikely to provide any clues about the current situation. And as regards consumer price data, the situation has been clear for some months anyway: The Fed would like to see a higher rate of inflation”.
“As for CPI data: The name of the game for the USD is the higher, the better. After all, rising inflation would be an argument for interest rate hikes as soon as this year”.