Analyst Robert Howard says August US CPI could decide whether the Fed tilts
toward a September hike or holds at next week’s policy meeting, and will drive
dollar moves. Reuters survey median forecasts headline CPI +0.4% MoM/+3.4% YoY
and core CPI +0.2% MoM/+2.4% YoY. A hotter print would amplify hawkish calls for
a September hike and likely lift the dollar; a cooler print would bolster dovish
case for a sixth consecutive hold, weighing on the currency. Markets put the
probability of a rate increase this month at 57% after last Friday’s strong
nonfarm payrolls pushed expectations hawkish; that shift came 24 hours after
Waller’s dovish remarks that pressured the dollar and one week after Warsh’s
hawkish Jackson Hole guidance had lifted it.
