USDJPY, H1
The US CPI report beat estimates with August gains of 0.4% for both the headline and the core, following July gains of 0.6% for both, and respective June gains of 0.6% and 0.2%. The August CPI headline and core price gains rounded up from 0.370% and 0.385% respectively. The initial downside demand shock for prices has now been overrun by the boost from growing supply constraints, as evident with the huge 5.4% used car price surge after a 2.3% July gain, and a 0.6% apparel price rise that left a third consecutive big gain. On a moving average basis CPI headline and core gains will soon be turning higher, after a downdraft into the pandemic. We have 6-month average price gains of 0.042% for the headline and 0.105% for the core that both still undershoot respective 12-month average gains of 0.110% and 0.143%, though the 6-month measures are rising quickly. For the August PCE chain price figures, we expect gains of 0.3% for the headline and 0.4% for the core. This would leave a headline rise in the y/y metric to 1.2% from 1.0%, alongside a rise in the y/y PCE core metric to 1.5% from 1.3%. The y/y PCE chain price gains in Q4 should sit near 1.3% for the headline and 1.7% for the core. We expect August consumption gains of 0.9% for the nominal measure and 0.6% for the “real” measure, which correspond to estimated August retail sales gains of 1.2% for both the headline and ex-auto measures.
USDJPY topped at 106.25 earlier, and continues to track lower, following the CPI print. The pair have breached the daily pivot and 200-hour moving average at 106.12 and come with 2 pips of the day low at 106.07, from earlier in the Asian session. Below sits the key 106.00 and the S1 level at 105.95.
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Stuart Cowell
Head Market Analyst
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