Jobless claims came in at 386K for this week versus forecast and last week’s reading of 377K. Employment data has been souring the US economic recovery and this adds to pressure the FOMC to do something when they meet next week on Wednesday, June 20. But will they?
Ben Bernanke and Janet Yellen have noted that inflation needs to be curtailed if the FOMC is to consider QE. With an FOMC meeting next week, today’s CPI could be a factor in its monetary policy decision.
CPI for May came in at -0.3% versus forecast of -0.2% and April’s reading of 0.0%. This is the sharpest fall in three years according to bloomberg. This makes the year-on-year rate at 1.7%, the lowest since 1.6% in Feb. 2011.
Core CPI data, which excludes food and energy was 0.2%, same as forecast and April’s reading. With oil prices falling, it is not surprising that the “core” CPI data is positive while the overall CPI data fell.
Combined with the PPI data from yesterday, inflation does seem to be curtailed. Add to the poor US retail sales data yesterday and today’s worse than expected Jobless claims data, the market might be pricing in a slightly higher scope for the FOMC to employ QE
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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