Focus for 15 JAN 2010: U.S. CPI + University of Michigan Consumer sentiment


Active Trader
Jan 12, 2010
Focus for 15 JAN 2010: U.S. CPI + University of Michigan Consumer sentiment

* U.S. CPI to slow and remain steady
* Michigan consumer sentiment index to rise towards 95.0
* Dollar to be influenced by external factors

A batch of U.S. economic data will be released on Friday 15th January with U.S. consumer prices and the Empire State manufacturing survey out at 13:30GMT, followed by industrial production and capacity utilization at 14:15GMT. The University on Michigan will release its preliminary consumer sentiment index for January at 14:55GMT and in New York’s afternoon session, Richmond Fed President Lacker and San Francisco Fed President Yellen are scheduled to give speeches at 17:30GMT and 19:30GMT respectively.

Consumer prices and the University of Michigan consumer sentiment survey should be the focus for fundamentals traders but there will also be some market-moving risk for the Empire State figure, especially if it continues to ease from its October high and falls below the zero level.

Seasonally adjusted CPI has stabilized between gains of 0.2% and 0.4% over the last few months (July’s figure was flat), while the core (ex-food and energy) has ranged between flat and 0.2% for the last seven months. The rise in energy prices is expected to have a greater effect than food prices due to the recent increase in oil prices above the $80 per barrel level. The consensus forecast for CPI and core CPI is 0.2% and 0.1% respectively, implying further steadying of inflation in U.S.

The University of Michigan’s consumer sentiment index is expected to rise to 74.0 in January (preliminary reading) according to a Reuters poll, which would take it marginally after September’s figure of 73.5. Note that last month’s reading was revised downwards from 73.4 to 72.5, which represents some downside risk to the January figure, especially since the index’s rise after the dip in November to 67.4 may have been somewhat ‘strong’.

An overly bearish figure for the Michigan CSI (below 70.0) should weigh on the dollar and possibly inject some risk aversion into the equity markets, however, the focus over the last few days has been on the euro, especially from ECB President Jean-Claude Trichet and his colleagues’ handling of the sovereign debt troubles of Greece. Any sharp moves in U.S. trading may be followed by profit taking ahead of the weekend.


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