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US July CPI eyed by markets for direction on inflation trend

Action Forex forecasts headline CPI at 0.2% month over month and 3.4% year over year, with core inflation also at 0.2% month over month, as July’s data comes after June’s unexpectedly lower inflation.

Reported · Written up by our desk · Major Pairs

Markets are focusing on the US July CPI release as traders look for clues on whether June’s weaker inflation reading was the start of a trend or a one-off, according to Action Forex. The outlet forecasts headline CPI at 0.2% month over month and 3.4% year over year, compared with prior readings of -0.4% and 3.5%. It also expects core inflation at 0.2% month over month and 2.5% year over year, versus prior 0.0% and 2.6%.

Action Forex said the rest of the day’s calendar is lighter, with final headline inflation data due from Germany and Italy and consumer confidence figures from Norway. Separately, it noted Brent crude’s moves as an input to broader risk sentiment, with the oil price briefly above USD90 per barrel before reversing to around USD87, then climbing again toward USD90 amid renewed concerns about regional escalation tied to shipping.

The outlet cited a suspected Houthi attack in the Bab el-Mandeb Strait and a US strike on a vessel in the Gulf of Oman as factors that increased uncertainty and supported a move back toward USD90. It added that any renewed diplomatic progress could quickly shift attention away from oil’s slide back near last week’s low around USD80 per barrel.

In the US, Action Forex also highlighted the NFIB Small Business Optimism Index, which rose 2.4 points to 99.8 in July. It said labour market-related components improved, including more firms reporting job openings they could not fill, while three-month hiring and capex plans also moved higher, even as realized employment changes remained low.

Latest closeWTI crude $83.42 ▲1.6%|Brent $89.26 ▲1.8%

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