CPI Down, USD Index Hanging Tough

It appears as though the U.S. Federal Reserve’s 2018 policy of gradual tightening has taken root. Inflation to start the new year has dropped considerably, following the aggressive rate-hiking of the previous 12 months. CPI (Jan., YoY) is down, a clear-cut sign that FED policy has indeed been effective.

Here is a quick look at all of the numbers from this morning’s U.S. Consumer Price Index report:

Event                                                                Actual          Projected       Previous

CPI(MoM, Jan.)                                                 0.0%                  0.1%               0.0%

CPI(YoY, Jan.)                                                    1.6%                  1.5%               1.9%

CPI except Food & Energy(MoM,Jan.)           0.2%                  0.2%             0.2%

CPI except Food & Energy(YoY,Jan.)             2.2%                   2.1%              2.2%

It remains to be seen whether or not the hawkish FED of 2018 was a good thing for the American economy in the long-term. However, two things are for certain ― inflation is down and rates aren’t going up anytime soon.

March USD Index Futures: Technical Outlook

March USD Index futures have put in a solid session, at least in comparison to Tuesday. Prices are in the green, rotating near the 96.700 level.

Overview: The participation and volatility of the past two sessions in the March USD Index has been significant. Daily ranges are above normal due to the ongoing U.S./China trade negotiations. By far, this is the number one fundamental facing this market.

Today’s weak U.S CPI release will go a long way to backing up the current FED policies of “flexibility” and “patience.” Inflation is firmly in check and one has to wonder when, or if, Jerome Powell and the FED will once again take a hawkish stance toward the Greenback.