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US CPI downside surprise might encourage modest dollar selling - BTMU

FXStreet (Łódź) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ suggests that lower than expected US September CPI numbers could weigh on the USD.

Key Quotes

"Given the shift in rhetoric from some Fed speakers who have expressed concern over falling inflation expectations and the impact of a stronger dollar on inflation going forward, the inflation data from the US today is likely to get greater market attention than usual."

"The core annual CPI rate has declined for the three consecutive months (two decimal point basis) and a further softening again today is possible."

"Housing and Owner Equivalent Rents remain key components going forward though over the medium term and assuming the labour market continues to improve and earnings pick up, we can only see a gradual increase in core CPI in 2015, but a downside surprise today might encourage some modest dollar selling as rate hike timing is pushed back a bit."

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