The U.S. headline CPI came in softer than expected with a 0.3% month-over-month gain in April versus the estimated 0.4% increase. This brought the annual CPI reading down from 3.5% to 3.4% as expected.
Meanwhile, core inflation merely hit the mark, showing a 0.3% monthly gain in underlying price pressures.
- Headline CPI for April: 0.3% m/m (0.4% expected, 0.4% previous)
- Headline CPI for April: 3.4% y/y (3.4% expected, 3.5% previous)
- Core CPI for April: 0.3% m/m (0.3% expected, 0.4% previous)
Link to U.S. Consumer Price Index for April 2o24
The increase in cost of consumer goods was driven mostly by higher gasoline prices, which chalked up a 2.8% surge for the month, and shelter costs, which rose 0.4% for the third month in a row.
Food costs were mostly unchanged, as supermarket prices even tumbled mostly due to a 7.3% monthly slump in egg prices.
Market Reactions
U.S. Dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies: 5-min Chart by TradingView
Dollar traders seemed to be biting their nails ahead of the U.S. CPI report, although there was a noticeable bearish tilt an hour before the actual release.
The U.S. currency sold off sharply upon seeing some red in the monthly headline CPI and a dip in the annual inflation reading, as these solidified the view that the Fed is likely to pursue its easing plans for the year.
Additional bearish dollar vibes may have come from the downbeat Empire State manufacturing index, which fell from -14.3 to -15.6 instead of improving to -9.9 this month, and the flat retail sales reading for the same month.
After the initial bearish reaction was faded, the downward trajectory resumed for the rest of the trading day. The dollar chalked up its largest losses versus the Kiwi, yen, and Aussie while the Loonie lagged behind its forex peers.
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