US CPI Preview: Back to normal levels, USD needs time to confirm weakness

Consumer Price Index data is set to be released at 12:30 GMT by the US administration. Core and Headline rates are expected to be flat in May, up from April deflation. Meanwhile, USD is back to pre-pandemic levels in the major pairs but is not a solid trend, according to FXStreet’s analyst Joseph Trevisani.

More US CPI Preview: Don't expect the market to react too much – TD Securities

Key quotes

“The Consumer Price Index is expected to rise to 0.0% in May from -0.8% in April and-0.4% in March. The annual rate is forecast to slip to 0.2% from 0.3%. The core rate is projected to be flat in May from March’s -0.4% and April’s -0.1%.”

“The precipitous drop in consumer prices in March and April was a direct consequence of the lockdown induced plunge in consumption. The incipient recovery will return both to their normal positive aspect though the amount of the rise in price is largely dependent on the strength of the consumption gain.”

“The Dollar current weakness is not a trend and is due to the waning momentum of its recent decline. Competitive economic comparison is next on the currency agenda but it may take several weeks until sufficient data is accumulated to determine whether the US, Europe, Japan or elsewhere are recovering the fastest.”