Dollar Extends Damage on Tame CPI

The dollar sharpened its losses after a benign core CPI report reinforced speculation that the Fed may finish raising interest rates after this month’s expected tightening.

While the headline CPI rose 0.1% in Feb from January’s 0.7%, the core CPI edged up 0.1%. On a year to year level, the headline CPI rose 3.6%, while the core index rose 2.1%, the lowest since October. We warned in yesterday’s’s Audio Market Analysis that any core CPI figure below 0.2% would be dollar negative because as US currency is already sustaining a deteriorating sentiment from the external front.

On the manufacturing front, the Philadelphia Fed index fell to 12.3 in March from 15.4, undershooting expectations of a 13.4 figure. The index was split, with advances in the new orders (12.5 to 20.8) and inventory (9.3 to 11.1) indices and declines in the prices paid (30.5 to 17.2) and employment indices (11.3 to 5.4). Nonetheless, the 6-month future index plummeted to 14.6 from 31.1, its lowest since September.



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