US Dollar: CPI outcome to steer Fed path – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad notes the US Dollar (USD) weakened on broad Japanese Yen strength before partially recovering as strong US August payrolls revived expectations for a September Fed hike.
Brown Brothers Harriman's Elias Haddad points out that the US Dollar weakened initially due to strong Japanese Yen, but later stabilized as US August employment data boosted expectations for a September Federal Reserve rate hike. The Federal Reserve's next move will largely depend on the US August Consumer Price Index and Producer Price Index results, both of which carry significant risks for a volatile market.
A strong US CPI print could lead to a September rate hike, strengthening the USD. However, other major central banks' tightening measures may prevent USD from reaching new cyclical highs. The US August PPI will provide a preview of the CPI report, with a focus on the services sector. The Fed's September hike hinges on the Friday CPI release, and Fed Chair Kevin Warsh cautioned that even with better-than-expected inflation readings, underlying trends have not significantly improved.
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