U.S. Dollar Tumbles As February CPI Surges On Rising Gasoline

By Trang Nguyen,

THETAKEAWAY: U.S.Consumer Price Index Rose 0.4 percent in February > A Jumpin Gasoline Price Accounted for Over 80 Percent of Change in AllItems Index > U.S. DollarSlip vs. its Major Peers

U.S. inflation rose themost in 10 months in February on recent rises in energy costs,consistent with Fed Chairman Ben Bernanke’s statement at acongressional panel on Wednesday that r ising gasoline priceswill create “temporary jump” in inflation whilereducing American’s purchasing power. The seasonally adjustedconsumer price index for all urban consumers rose 0.4 percent lastmonths, the U.S. Bureau of Labor Statistics reported today. Thereading matched consensus forecast from Bloomberg News survey. Overthe last twelve month, the index edged up 2.9 percent. The lessvolatile figures which exclude food and energy rose 0.1 percent ona monthly basis and 2.2 percent on a yearly basis, in line witheconomists’ expectations. Since inflation outside of food andenergy is slowing, inflationary pressures in the U.S. economyremains subdued.

U.S. Consumer Price Index (YoY): June 2010 to Present

Prepared by Trang Nguyen

A surge in the cost of living in the U.S. in February was mainly attributable to a jump in gasoline. The gasoline index sharply mounted last month, accounting for more than 80 percent of the change in all items index. Despite a fall in natural gas price (-9.8%), the gasoline increase (+12.6%) pushed the energy index 3.2 percent higher. Meanwhile, the food index remained unchanged in February, with the food at home index having been flat for the second straight month. Besides, the indexes for new vehicles, medical care and household furnishings and operations all advanced while index for apparel, recreation, used cars and trucks, and tobacco all declined.

AUDUSD 1-minute Chart: March 16, 2012

Charts createdusing Strategy Trader – Prepared byTrang Nguyen

In the minutesfollowing the Consumer Price Index report, the U.S. dollar losesits footing versus most of its major trading partners. As can be seen from the1-minute AUDUSD chart above, the currency pair immediately jumpedapproximately 60 pips from 1.0530 to 1.0590 within thirtyminutes. The Relative Strength Indicator crossing above70-level, an overbought territory, indicated that forex tradingcrowd aggressively buy in Australian currency while reducing theirgreenback holdings. At the time this report was written, thereserve currency tumbled 0.46 percent versus the aussie, trades atA$0.9454.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang,email tnguyen@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/03/16/031612_US_Consumer_Price_Index_February.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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