US inflation easing off as expected, but core rate holding up
As expected, the US inflation readings have dropped back in the headline rate, which includes fuel prices. From 1.8%, the year on year rate is in to 1.6% and as Fed chair Powell has suggested, the pullback is a reason to consider easing policy and a 25bp cut is now widely expected at the end of the month.
However, we also saw the core rate ticking up from 2.0% to 2.1%, so this may offset some of the dovish outlook, and judging by the lack of USD response, the market is happy to hold current levels until we hear more from Powell later, with a host of other Fed speakers on the slate for later on this evening.
EUR/USD is holding steady in a tight range below the 1.1280 highs, with Cable doing the same below 1.2570, where 1.2590 is the key resistance point.
USD/JPY is trying to move back towards the mid 108.00's, but we have some minor resistance into 108.30-40.
We are also watching USD/CAD, where there is ongoing interest to sell towards 1.3000 it seems.
AUD and NZD continue to push for better levels, with the backdrop of steady risk sentiment supporting also.