When is the US CPI and how could it affect USD/JPY?

US February CPI Overview

Wednesday's US economic docket highlights the release of the latest consumer inflation figures for the month of March, due later during the early North-American session at 12:30GMT. The headline CPI is anticipated to tick higher to 0.3% m/m rate from 0.2% previous and lift the yearly to 1.8% as against 1.5% y/y reported in the previous month. Meanwhile, Core CPI, which excludes food and energy costs, is anticipated to rise 0.2% m/m during the reported month, slightly higher than 0.1% in February, and hold steady at 2.1% y/y rate.

Analysts at TD Securities are looking for the US CPI to pick up to 1.9% y/y in March on a sharp rise in gasoline prices. “For core CPI, we expect a weak 0.2% m/m print to leave annual core inflation at 2.1%, as OER is likely to moderate this month. Our forecasts suggest core PCE inflation is likely to slow to 1.7% by March.”

Deviation impact on USD/JPY

Readers can find FX Street's proprietary deviation impact map of the event below and as observed, the reaction in case of a relative deviation of +0.98 to -0.98 in the core CPI print is likely to be in the range of 23-27 pips during the first 15-minutes and could stretch to 40-pips in the following 4-hours.

How could it affect USD/JPY?

Barring some immediate reaction, today's macro data seems unlikely to have a lasting effect on the major as the focus will remain on the release of the minutes of the latest FOMC meeting minutes, due later during the US trading session. However, a surprisingly hotter than expected reading could assist the pair to build on its ongoing rebound from sub-111.00 level, or over one-week lows set in the previous session, and aim back towards testing the very important 200-day SMA near mid-111.00s.

Alternatively, a softer reading might be enough to reinforce market expectations that the Fed will refrain from raising interest rates in 2019 and prompt some fresh selling around the greenback. The pair, however, is likely to find some immediate support near the 111.00 handle, which if broken decisively might accelerate the slide further towards the 110.60-50 strong horizontal support. 

Key Notes

   •  US CPI Preview: Steady state inflation

   •  US CPI: Headline inflation should have gotten a sizeable boost in March - CIBC

   •  USD/JPY: Risk-off takes a hold but bulls defend 111 handle

About the US CPI

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).