USD Strengthens As March Consumer Price Index Softened On Eased Gas Price

By Trang Nguyen,

THETAKEAWAY: U.S. Consumer PriceIndex Rose 0.3 Percent in March> SoftInflation may Encourage FOMC to Preserve its Zero Interest RatePolicy for a Prolonged Period of Time > USDStrengthens

U.S. overall inflation has softened in March after rising the most inten months in February due to temporary jump in gasoline price,lending the FOMC more support to preserve its zero interest ratepolicy for a prolonged period of time.

The seasonally adjusted consumer priceindex for all urban consumers increased 0.3 percent last month, the U.S. Bureau of LaborStatistics reported today. The reading came in in line with economist’sexpectations from the Bloomberg News survey. Over a year prior , the all items index fell back to 2.7 percent from 2.9 percent inFebruary.

The gasoline index climbed 1.7 percent following its 6.0 percent February increase. Together with a rise in gasoline index, the fuel oil increase (+2.7%) and natural gas rally (+0.9%) pushed the energy index 3.2 percent higher. Meanwhile, the food index advanced 0.2 percent due to notable increases in meats, poultry, fish and eggs.

The so-called core index, which excludes foodand energy, rose 0.2 percent in March from the previousmonth’s 0.1 percent increase. On the monthly basis, the coreindex advanced 2.3 percent in the month, higher than 2.2 percentprojected. The rise reflected the widespread upsurge in prices ofmost of the major components last month, among which the indexesfor shelter and used cars and trucks accounted for about half oftotal increase. Besides, the indexes for medical care, apparel, recreation, new vehiclesand airline fares all picked up .

USD CAD 1-minute Chart: April 13 ,2012

Chart createdusing Strategy Trader – Preparedby Trang Nguyen

The U.S. dollar gains its footing versus most of its major peers except its New Zealand counterpart ahead of the opening bell in North America trade today. Since the inflation figures matched with economists’ expectation, market participations showed fairly muted reaction in the minutes following the release. As can be seen from the 1-minute USDCAD chart above, the currency pair traded in the tight range between 0.9935 and 0.9945 after the report. Additionally, the reserve currency still strengthens 0.46 percent against the Swiss franc and gains 0.44 percent against the single currency.

--- 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/2012/04/13/041312_US_Consumer_Price_Index_March.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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