FX Daily: Impact of US CPI Mostly Depends on Equities

ING anticipates a 0.9% MoM US headline CPI print that may boost the USD only if it triggers a correction in resilient equities. Meanwhile, political risk is emerging in the UK, and the Czech National Bank is signaling a dovish stance relative to market expectations.

Key Takeaways

• 1.ING forecasts a hot 0.9% MoM US headline CPI print, significantly above the 0.6% consensus, though core CPI is expected to remain moderate at 0.3%.
• 2.The US dollar's upside potential following CPI data depends on an equity market correction, as risk sentiment has become a more dominant driver than rate differentials.
• 3.Political instability in the UK is beginning to bake a risk premium into Sterling as pressure mounts for Prime Minister Keir Starmer to resign.

Table of Contents

• USD: Another 0.9% MoM inflation jump
• EUR: ZEW to remain pessimistic
• GBP: More political premium can build
• CZK: CNB may wait a long time with rate hikes
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