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Consumer Price Index (CPI) / Inflation Report

Importance: Great ****

Influence: Forex, Equity Markets, Commodity Markets

US CPI Release: The CPI report is released on a monthly basis by the US Bureau of Labor Statistics between the 15th and the 22nd day of each month

Europe’s (HICP): Eurostat announces the HICP Harmonised Indices of Consumer Prices) each month:

- The HICP of the previous month (middle of the month)

- A flash estimate of the current month (end of each month)

(HICP): -Harmonised Indices of Consumer Prices

The US CPI Index

The consumer price index is the measure of inflation for a country. The CPI measures the price of many different products and services. There are over 200 categories of goods and services weighted in the CPI:

1. Food & Beverage

2. Education

3. Housing

4. Transportation

5. Medical Care

6. Recreation

7. Apparel

8. Communications

Consumer Price Index (CPI)

The Effect of CPI / HICP in the Forex Market

◙ The higher the level of CPI the higher the expected level of interest rates and thus the domestic currency is expected to gain value.

◙ The lower the level of CPI the lower the expected level of interest rates and thus the domestic currency is expected to lose value.

 

The Effect of CPI / HICP in the Equity Markets

◙ The higher the level of CPI the higher the expected level of interest rates and thus the equity markets are under pressure (falling).

◙ The lower the level of CPI the lower the expected level of interest rates and thus the equity markets are rising.

 

The Effect of CPI / HICP in the Commodity Markets

◙ The higher the level of CPI the higher the expected level of interest rates and thus the price of commodities are under pressure.

◙ The lower the level of CPI the lower the expected level of interest rates and thus the price of commodities are rising.

 

Related Links:US Bureau of Labor Statistics | ► Eurostat

 

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What is the Consumer Price Index?

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