USD strength caused by Core CPI prints in the 0.3-0.4% MoM range to fade – Credit Suisse
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How to trade the December US Consumer Price Index (CPI) data release? Here is the Credit Suisse’s cheat sheet.
“Core CPI prints of 0.2% MoM or lower should solidify expectations of a 25 bps hike at the 1 Feb FOMC, causing the weak USD trend to likely extend further.”
“Readings between 0.3% and 0.4% MoM might initially be seen as disappointing relative to market-implied expectations, but likely will not change the overall narrative, especially in FX where USD topside is still trading at a small premium: we would be inclined to fade resulting USD strength.”
“Readings above 0.4% MoM on the other hand would call for more caution and represent an important tail risk to our near-term bearish USD view set.”
“A print of 0.6% MoM or higher would likely lead to a turbulent repricing in Fed policy expectations, a weak reversal in risk appetite and generalized USD strength in all pairs.”
See – US CPI Preview: Forecasts from 10 major banks, price pressures to ease further
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