We turn our inflation and retail binoculars toward the US today
US CPI is going to be the big one today as we get to see how entrenched the recent run of inflation is going to get.
Here's what's expected;
CPI 2.4% vs 2.1% prior y/y
Core CPI 2.1% vs 2.2% prior y/y
So up on the headline but a softer core. If we see the headline match expectations (or better) and the core stays up or goes higher, then so will the buck. If the headline is up but the core misses, that might make for neutral USD action. Both missing expectations and the buck will unwind some of this Yellen rally. As ever, go with a +/- 2-3pp move as a trigger for a decent dollar move.
Among the CPI data is the real weekly earnings numbers. We're looking for 0.0% vs 0.1% prior m/m. The prior y/y was 0.2%. Real average hourly earnings was 0.8% y/y in Dec. The Fed will want to see a nice strong number here, and if they get one, that will support the dollar.
Retail sales are expected at:
Advance sales 0.1% vs 0.6% prior
Ex-autos at 0.4% vs 0.2% prior
Ex-autos & gas at 0.3% vs 0.0% prior
Core sales (control group) at 0.3% vs 0.2% prior
The consumer has been heralded as a boon for the economy so again, good numbers will be dollar positive.
Lots in the mix for 13.30 GMT so it will take some deciphering. I'd go with the inflation numbers first and if there's nothing shocking there, then go with retails.
The Feb Empire State manufacturing report gives us a first look at the new month too and that's expected at 7.0 vs 6.5 prior.
