The main news today is the release of the data on the Consumer price index in the US. This is the main indicator of inflation, and measures retail prices change for the fixed basket of goods and services. The inflation figure, on the other hand, is the major factor behind interest rates change. At present, inflation is far from its target of 2% and by the end of the year, according to the Fed estimate, may only reach 1.3-1.4%.
Consumer price index is expected to grow by 0.5% to the last year figure and by 0.2% to the previous month. This is a good news considering that for the last two months inflation was in the negative figures. Another potential inflation indicator, hourly wage growth, also increased for May from 2.2% to 2.3%.
Should the expectations about the consumer price index change be correct, this may help the USD gain back its yesterday’s losses. Yesterday, investors negatively reacted to the downgrade of the US GDP growth for 2015. The Fed estimated that this year GDP would grow by 1.8-2%, instead of the previous estimate of 2.3-2.7%. Unemployment would remain at 5.2-5.3%, instead of the previous estimate of 5.0-5.2%.
It is worth paying attention today to the release of the data on the initial and continuing jobless claims in the US. A small decrease is expected, with the total initial claims amounting to 275 thousands and continuing claims totaling 2200 thousands, which may give an additional support to the USD.
According to the fundamental factors, the USD may strengthen during the day. The pair EUR/USD may reach 1.1330 and 1.1270. In case of the negative data on the consumer price index, the pair would continue growing towards 1.1430, 1.1490 и 1.1590.