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Is Inflation Dead? Trump Pressures the Fed

Sep 12 2019, 04:21 PM (BDT) |


On September 10, the US released producer price index. US inflation almost dropped to zero level. Final demand goods fell by 0,5% (less foods and energy is 0%), while final demand services rose.

Picture 1. The US PPI (Aug)

On Thursday, the August data on CPI is released at 12-30 GMT. The forecast is +0,1%. We expect the result to come out in line with the forecast, considering the PPI. 

US inflation strongly depends on oil prices. Speaking of the oil price, we should mention the OPEC report published on Wednesday. OPEC decreased oil demand growth by 80 mb/d for this year and by 60 mb/d for the next year. The demand decreases due to the trade war. Meanwhile, Trump continues to press the Fed. ‘... The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.” – Trump tweeted. 

Swiss PPI comes out on Thursday. The forecast is -0,2%. 

‘Is inflation dead?’ is the question the economists keep asking. Unfortunately for most economies, this question is rhetorical. 

On a daily time frame, USD/CHF is rising and almost reached the resistance line at 0,99483 (50% level). The 200-EMA is moving sideways. The pair reached the upper linear regression line – there is a possibility of a reversal. There are two possible options:

  • If the pair bounces from 0,99483, bears might move the market down to 0,98800, and then to 0,98000;

  • The pair may break its resistance and reach the next level of 1,00160.   


Picture 2. USD/CHF. 1D TF

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