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POSITIVE US CPI KEEPS DOLLAR STRONG

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POSITIVE US CPI KEEPS DOLLAR STRONG

Oct 22 2014, 3.20pm GMT

Stock.com

The dollar strengthened against a basket of currencies as the Consumer Price Index for All Urban Consumers (CPI-U) increased to 0.1 percent.

The September figures, released on a seasonally adjusted basis, were reported today by U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.

EUR/USD reacted within the hour, strengthening the dollar from 1.2697 to 1.2664.

Equally the USD/CHF was up from 0.9497 to 0.9527.

A substantial jump was seen in the USD/CAD working with the positive US CPI alongside the negative Canadian core retail sales figure, forecast at 0.2 with the actual realising -0.3. The USD/CAD jumped from 1.1221 to 1.1286.

US CPI figure breakdown

Increases in shelter and food indexes outweighed declines in energy indexes to result in the seasonally adjusted all items increase. The food index rose 0.3 percent as five of the six major grocery store food group indexes increased. The energy index declined 0.7 percent as the indexes for gasoline, electricity, and fuel oil all fell. 

The index for all items less food and energy increased 0.1 percent in September. Along with the shelter index, the index for medical care increased, and the indexes for alcoholic beverages and for personal care advanced slightly. Several indexes were unchanged, and the indexes for airline fares and for used cars and trucks declined in September.

The all items index increased 1.7 percent over the last 12 months, the same increase as for the 12 months ending August. The 12-month change in the index for all items less food and energy also remained at 1.7 percent. The 12-month change in the shelter index has been gradually increasing, and reached 3.0 percent for the first time since January 2008. The food index has also risen 3.0 percent over the span, while the energy index has declined 0.6 percent.

Brief Explanation of the CPI

The Consumer Price Index (CPI) is a measure of the average change in prices over time of goods and services purchased by households. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers households of wage earners and clerical workers that comprise approximately 28 percent of the total population and (2) the CPI for All Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-U), which covers approximately 89 percent of the total population and includes, in addition to wage earners and clerical worker households, groups such as professional, managerial, and technical workers, the self-employed, short-term workers, the unemployed, and retirees and others not in the labor force.

The CPIs are based on prices of food, clothing, shelter, and fuels, transportation fares, charges for doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living.

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