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May 13 - 10:55 AM

SocGen: What We Expect from This Week's US CPI Print? Will it Trigger a Breakout in EUR/USD?

By eFXdata  —  May 13 - 09:30 AM

Synopsis:

Société Générale provides a detailed preview of the expected US Consumer Price Index (CPI) data for April, highlighting its significance in the current economic context and discussing potential impacts on major currency pairs such as the USD Index and EUR/USD.

Key Points:

  • Data Overview: The April CPI report is anticipated to show a 0.4% increase in the headline and a 0.3% rise in the core components. These figures follow a series of 'soft' 0.4% monthly gains influenced by varying factors across the first quarter of the year.
  • Components to Watch: The prediction of a 0.3% core increase assumes continued growth at trend rates for rents, insurance, and clothing, without the surges seen in previous months. Gasoline prices are expected to boost the headline number.
  • Market Movements: While the upcoming CPI data is critical, SocGen does not forecast a breakout in the USD Index or EUR/USD based on their CPI projections. However, the firm notes that any potential breakout is increasingly likely to be upward if it occurs.

Conclusion:

SocGen underscores the importance of the upcoming CPI data in shaping market expectations and movements. While the firm does not foresee a dramatic shift in major currency indices based on this data alone, it acknowledges the growing potential for upward movements, contingent upon the data deviating significantly from expectations.

Source:
Société Générale Research/Market Commentary

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