Dollar Recovers After Initial Fall, But Stays Weak Against Peers

Trading 12 sept 2020 Commentaire »

After opening lower Friday morning, extending its slide from previous session, the U.S. dollar recovered to move above the flat line as the session progressed after data showed U.S. consumer inflation improved more than forecast in August.

A report released by the Labor Department today showed consumer prices in the U.S. increased by slightly more than anticipated in the month of August.

The report said the consumer price index climbed by 0.4% in August after advancing by 0.6% for two straight months. Economists had expected consumer prices to rise by 0.3%.

Excluding food and energy prices, core consumer prices still rose by 0.4% in August following a 0.6% increase in July. Core consumer prices were expected to edge up by 0.2%.

The dollar index, which dropped to 93.10, losing more than 0.25% in the process, recovered to 93.38 by early afternoon, and was last seen at 93.27, down just 0.07% from previous close.

Against the Euro, the dollar was down more than 0.25% at $1.1847, after falling to a low of $1.1875 earlier. The Euro was stronger against most of its peers today, riding on ECB President Christine Lagarde's optimistic assessment on Eurozone economy and soft approach to the currency's strength. She said that the ECB would "carefully" monitor the exchange rate, but it is not a monetary policy tool.

Germany's consumer prices were unchanged in August after a 0.1% fall in July, data from Destatis showed.. Compared to the previous month, the index decreased 0.1%.

The Pound Sterling was weaker by nearly 0.1% at $1.2799 after having firmed up $1.2859 in the Asian session. Data published by the Office for National Statistics showed the UK economy expanded for the third straight month in July as lockdown measures continued to ease. GDP expanded 6.6% in July from June, when it gained 8.7%, the data said. Economists expected GDP to climb 6.7%. In three months to July, GDP fell 7.6% from the previous three months.

Likewise, industrial output rose 5.2%, slower than the 9.3% increase seen in the previous month. Manufacturing output advanced 6.3%.

The Japanese currency was flat at 106.13 a little while ago, after having firmed up to 106.06 from a low of 106.26 touched in the Asian session. Producer prices in Japan were up 0.2% on month in August, the Bank of Japan said. That was in line with forecasts and down from 0.8% in July.

On a yearly basis, producer prices fell 0.5% - again matching expectations following the 0.9% decline in the previous month.

The Aussie was firmed by more than 0.3% with a unit of the currency fetching US$0.7283. The dollar had earlier weakened to 0.7306.

Against the Swiss franc, the dollar was trailing its previous close by about 0.2% with a unit of greenback fetching CHF 0.9088, compared to CHF 0.9106 on Thursday.

The Loonie was marginally up against the dollar at 1.3183, after easing to 1.3208 from 1.3151.


The material has been provided by InstaForex Company - www.instaforex.com

Analytics and trading signals for beginners. How to trade the EUR/USD currency pair on September 14? Analysis of Friday’s

Trading 12 sept 2020 Commentaire »

Hourly chart of the EUR/USD pair.

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On Friday, September 11, the EUR/USD currency pair began to adjust against the last round of the downward movement, which was a correction against the unjustified strengthening of the European currency after the ECB meeting and Christine Lagarde's speech. Thus, the quotes were in an upward movement for most of the trading day. In our morning review, we recommended waiting for the MACD signal to sell, which was still formed. Thus, novice traders had every reason to open new short positions, however, at the moment, there are only a few hours left before the end of the trading week and it is unlikely that the pair will continue to fall. Thus, novice traders can close open sell positions and resume trading on Monday. On Monday, trading will open at night, thus, it will be inconvenient to maintain open short positions from Friday. If you leave them open, then do not forget about stop-loss orders that limit possible losses.

The fundamental background today was expressed by a single report on inflation in the United States. Yesterday, we already warned that inflation in America may exceed its forecasts, which will be very good for the US currency. So it turned out in practice. Despite the fact that many macroeconomic indicators of the state of the American economy are in the "knockout", inflation continues to remain at a very high level, as for the crisis. According to today's report, the consumer price index rose to 1.3% y/y, while inflation excluding food and energy prices rose to 1.7% y/y. Recall that both the Fed and the ECB set a target level for inflation of 2%. The European Union inflation in August was -0.2% y/y. In the United States, it was +1.3% y/y. The difference is obvious. Unfortunately, market participants have again shown that they do not care about statistics at all and react to them only selectively. Thus, the US dollar did not receive proper support on Friday, September 11.

On Monday, September 14, there will not be a single significant publication or event in the EU or America. Thus, trading can take place on this day with low volatility and in a calm channel. In general, the euro/dollar pair continues to trade in the side channel of 1.17-1.19 and no fundamental background can take the pair out of this range for a month and a half.

On September 14, the following scenarios are possible:

1) It is still not recommended for novice traders to consider purchases at this time, since the price could not overcome the level of 1.1903, which is the upper line of the side channel. Therefore, further upward movement is canceled for the time being. Also, there is not a single pattern that would support trading on the increase now.

2) Sales now still look more attractive, if only because traders failed to overcome the level of 1,1903. At the same time, the situation is not very clear as to the possibility of opening new short positions. First, there are no patterns that would support the downward movement. Secondly, the MACD indicator turned down after the price rolled back up, however, this ended the trading week. Therefore, now you need to maintain open short positions with a target of 1.1771 until Monday morning (by setting the stop-loss level). Or to make a new analysis of the market and consider the possibility of opening new positions for sale.

What's on the chart:

Price support and resistance levels – the target levels when opening purchases or sales. You can place Take Profit levels near them.

Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.

Up/down arrows – show when you reach or overcome which obstacles you should trade up or down.

MACD indicator(10,20,3) – a histogram and a signal line, the intersection of which is a signal to enter the market. It is recommended to use it in combination with trend lines(channels, trend lines).

Important speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp reversal of the price against the previous movement.

Beginners in the Forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management is the key to success in trading over a long period of time.

The material has been provided by InstaForex Company - www.instaforex.com

GBP/USD. Boris Johnson – the" destroyer " of the British economy

Trading 12 sept 2020 Commentaire »

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Perhaps the title of the article is too pretentious and loud. After all, it is rare when it happens that one person is behind some global event of national or world significance. Although this has happened in world history. We would just like to remind you once again of the football expression "The result is on the scoreboard". It means that they will always be judged by the result and only the result will be remembered by everyone. This is approximately the situation now in America and the UK, which are ruled by "friends" Donald Trump and Boris Johnson. Everything about Donald Trump was already written in the first article. No matter how much he boasts that the economy has flourished under him, no matter how much he claims that the whole of America has perked up under him, everyone will still remember the 32% drop in GDP, the trade conflict with China, mass rallies and protests caused by racist scandals, several suspensions of the government and public services due to lack of funding, the impeachment process, which lasted about a year, several high-profile dismissals from the White House, and other scandals. Thus, if Joe Biden is elected President in November, then Trump will leave his post as one of the worst presidents (judging by the results) in the entire history of the country.

However, let's return to the figure of Boris Johnson, thanks to which the pound has been falling since September 1. He came to power last summer like someone who is truly capable of bringing Brexit to an end. Moreover, Boris Johnson did not decide anything. He has not found a way to break up with the EU in a way that suits the opposition and the entire British Parliament. For several months, Johnson fought with Parliament in the same way as his predecessors, who also could not find a common language with the majority of deputies. After that, Johnson proposed to hold new elections to Parliament and the main opposition leader (the leader of the Labor Party, Jeremy Corbyn) agreed, considering that he could support the British. However, in practice, it turned out that the British want only one thing – to quickly complete the "divorce" with the European Union. Even then, it was obvious that it was impossible to reverse the process. Although the European Union has stated several times that if London wants to, it can still stay in the EU. However, Johnson dismissed such an option, and Corbyn suggested a second referendum, in which all Britons can once again express their will. Corbyn himself did not have an opinion on what to do next with Brexit. And, according to most experts, this is what played a cruel joke on him. In the parliamentary elections, the Labor Party suffered a crushing defeat, and Jeremy Corbyn resigned. The British have put all power in the hands of the Conservatives, who now absolutely do not need the support of any of the parties to pass any bill. Last year, we wrote that this is very bad for any democratic country. Because, in fact, democracy is killed by the lack of opposition. This is the current situation in the UK. Johnson can pass any bill using the votes of only his own party members.

However, we will not get ahead of ourselves and return to the "coronavirus". Without going into details, we can safely conclude that the British government failed in the fight against the epidemic. It was in the Foggy Albion that the largest number of deaths was recorded among all European States. The Kingdom was also in the leading positions in terms of morbidity. At the same time, it should also be noted that in Scotland, Wales, and Northern Ireland, there were much fewer cases of the disease and deaths. In these countries, there is a semi-autonomous mode of operation of the authorities. They could set the rules and terms of quarantine themselves. They installed it without following the recommendations of London. In the end, it was England that suffered almost the most in Europe.

There was a lull for several months, no laws were passed, Brexit negotiations were conducted exclusively in the format of a video conference, so there was no news from the UK. And then autumn came. In early September, it became known about the failure of the seventh and eighth rounds of negotiations on an agreement that would begin to operate after the end of the "transition period" and regulate the new relations between the European Union and Britain. However, when this happened, it became clear to almost everyone will not agree, since no one wants to give in. Therefore, formally, the negotiations continue and may continue for a month, however, they will not give any result. We are inclined to believe that Boris Johnson was initially not going to make any concessions and wanted to sign the agreement solely on his own terms. However, he failed to implement this idea (like many others before) and simply set a deadline for negotiations and announced a bill that violates the agreements between the EU and Britain on the Northern Ireland border.

Naturally, the bill "on the internal market of Great Britain" is explained by Boris Johnson by the interests of the country. They say that all four countries should have the same access to the British market, without any exceptions or restrictions. However, in practice, this bill, which has not yet been supported by the Parliament, is a direct violation of international law. The European Union, the United States, and even Wales, Scotland, and Northern Ireland have already condemned Johnson's bill, however, the Prime Minister is not going to back down and asked parliamentarians to vote "yes" to it. If Parliament grants Johnson's request (recall that the conservatives have the necessary majority to pass any bill without looking at other parties), then there is no doubt that a conflict will begin between the European Union and the UK. Sanctions, trade restrictions, and courts are possible. It is unlikely that Brussels will simply turn a blind eye to the fact that London just crossed out some points of the previously reached agreement on Brexit. Accordingly, retaliatory measures will follow in any case. And only one person will be responsible for everything that happens – Boris Johnson.

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Trading recommendations for the GBP/USD pair:

The pound/dollar pair continues its strong downward movement. The pair entered the Ichimoku cloud on the 24-hour timeframe and is now moving towards its lower border. Since the current fall in the pound depends entirely on the fundamental background of the UK, it can theoretically continue for as long as you want. However, a price rebound from the Senkou Span B line may still trigger a round of upward correction. Fixing the price below the Ichimoku cloud will increase the probability of the pair continuing to fall.

The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD. Donald Trump – the "destroyer" of the American economy

Trading 12 sept 2020 Commentaire »

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The year 2020 has become one of the most memorable in the last few decades. The year is not over yet, and the Internet is full of various funny pictures hinting at new surprises this year. Unfortunately, all the surprises that this year has presented are not festive. The global economy has suffered huge losses. The "coronavirus" epidemic continues to hold all States of the world in fear and slow down the recovery of economies. In some countries, it was not possible to suppress the spread of the COVID-2019 virus. Many countries remain under quarantine. In general, chaos. However, in this article, we will once again focus on the figure of Donald Trump. We believe that Trump can be considered 50% to blame for the troubles of the United States, which they have faced in the last year or two. Moreover, we remind you that the "coronavirus" and its consequences for the country and its economy are not the only bad things that have happened to America recently.

It all started with a trade war with China. Donald Trump considered that trade with Beijing is unfair since China sells many more goods in the United States than it buys. According to the American President, China should buy goods for an amount equal to exports to America. How logical and reasonable is this idea? By and large, if you follow this principle of Trump, absolutely any country in the world can make similar claims to any other country in the world since there are hardly any countries that have a trade balance of zero. Thus, these accusations against China were already absurd. However, this was the main reason for the introduction of duties on imports from China. It is clear that in addition to trade claims, the United States dumped a whole list of other charges on Beijing, including theft of intellectual property, collection of data on American users and consumers through Chinese digital companies, and much more. However, as usual, Washington did not present any evidence of Beijing's guilt in all mortal sins. There is also no need to prove a negative trade balance with China since these are official figures that are available to almost everyone interested.

Now, the trade war has begun. It began in 2018 and without going into all the details, we can say that there was no particular point in starting this trade war. If you look at the chart of the US trade balance over the past 5 years, you can see that since 2016, when Donald Trump came to power, the balance has only been decreasing. In 2016, the monthly trade deficit was approximately $ 40 billion. In 2017, it was $ 43-45 billion. In 2018, it was $ 50 billion. In 2019, it was $ 45-50 billion. In 2020, the deficit collapsed to $ 63.6 billion in July. Thus, the overall trade balance under Trump only got worse. Now let's look at a similar indicator in China. In 2020, when the whole world was faced with the "Chinese virus" and is experiencing extreme economic problems, China recorded the maximum trade surplus in 5 years, which amounted to $ 60 billion. And this is although the trade deal with the United States meant just an increase in purchases of agricultural products by several tens of billions of dollars. In other words, the trade balance between China and the United States may have improved in favor of the United States. However, the overall trade balance in the United States has become worse in recent years, and China – better.

Further, Donald Trump promised before the 2016 election to return the production of American companies to the United States. Or at least start the process. We understand that it is extremely difficult to bring back entire factories from China and other countries with cheap labor in just a few months or even years. However, this process has not even started. And now, with two months to go until a new election, Trump has begun to again promise to return the factories of American companies to the United States. Now Trump is threatening the companies themselves with high taxes on their products, "since they create jobs in China and work for its economy" and the cancellation of government orders if they do not return voluntarily. Thus, if President Trump is re-elected for a second term, we may see new wars with American manufacturers.

Well, let's not forget about the "coronavirus" that broke out of China and hit America most of all. There are also several million cases in India and Brazil. According to many experts, the "coronavirus crisis" has changed the balance of power in the international arena between its major players. China has strengthened its position, while America has weakened its own. Thus, China struck back at the States. Of course, we do not undertake to blame Beijing for the fact that the COVID-2019 virus broke free for a reason. However, if we do not take this factor into account, it turns out that China "responded" to America. The United States recorded a record 32% GDP collapse during the second quarter. This has not happened since the Great Depression.

Thus, it becomes clear that Trump should go. He has been a billionaire for a long time and has achieved everything in life that one could wish for. Therefore, at his age and with his achievements, probably the last thing you can want is the power to rule the world. It seems that this desire is what drives Trump. But will Americans go to vote for Trump on November 3, who promises to put even more pressure on China and almost completely abandon doing business and trade with it? We have already wondered, does it matter to ordinary Americans with whom Trump conflicts? Ordinary Americans are interested in work, wages, and stability in the country, and not in the international feuds that the president himself provokes.

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Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair shows that the price continues to trade in the side channel of $ 1.17 - $ 1.19, occasionally making attempts to exit it. A slight upward bias is present, however, this is not a trend. The Bollinger bands clearly show that a flat is currently occurring on the 24-hour timeframe. Thus, you can trade between the upper and lower bands.

The material has been provided by InstaForex Company - www.instaforex.com

Comprehensive analysis of movement options for #USDX vs EUR / USD & GBP/USD & USD/JPY (Daily) on September 14, 2020

Trading 12 sept 2020 Commentaire »

Minor operational scale ( Daily)

In the second half of September - is the correction complete? Another fall of the US dollar? Options for the development of the movement of #USDX vs EUR/USD & GBP/USD & USD/JPY on September 14, 2020.

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US dollar index

From September 14, 2020, the movement of the dollar index #USDX will continue depending on the direction of the range breakdown:

  • resistance level of 93.35 at the lower border of ISL38.2 of the equilibrium zone of the Minute operational scale fork;
  • support level of 93.00 - the upper border of the channel 1/2 Median Line Minute.

Breakdown of the support level of 93.00 - development of the #USDX movement in the channel 1/2 Median Line Minute (93.00 - 92.55 - 92.10), if the lower limit (92.10) of this channel is broken, it will be possible to update the local minimum 91.72 and reach the control lines - LTL Minor (91.40) and LTL Minute (90.80).

The breakdown of the resistance level of 93.35 on ISL38.2 Minute will determine the development of the movement of the dollar index in the equilibrium zone (93.35 - 93.90 - 94.45) of the Minute operational scale fork with the prospect of reaching the boundaries of the 1/2 Median Line channel (94.70 - 95.60 - 96.60) of the Minor operational scale fork.

Details of the #USDX movement since September 14, 2020 are shown on the animated chart.

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Euro vs US dollar

The single European currency EUR/USD from September 14, 2020 will also develop its movement depending on the direction of the range breakdown :

  • resistance level of 1.1890 - the lower border of the channel 1/2 Median Line Minute;
  • support level of 1.1830 - the upper border of ISL38.2 of the equilibrium zone of the Minute operational scale fork.

Breakdown of the resistance level of 1.1890 - the continuation of the EUR/USD movement in the 1/2 Median Line channel (1.1890 - 1.1945 - 1.1990) of the Minute operational scale fork with the prospect of updating the local maximum 1.2011 and reaching the levels:

  • 1.2055 - UTL control line of the Minor operational scale fork.;
  • 1.2075 - initial line of SSL of the Minute operational scale fork;
  • 1.2145 - UTL Minute control line.

If the support level of 1.1830 breaks at ISL38.2 Minute, the movement of the single European currency may continue within the boundaries of the equilibrium zone (1.1830 - 1.1770 - 1.1705) of the Minute operational scale fork and channel 1/2 Median Line (1.1720 - 1.1625 - 1.1525) of the Minor operational scale fork.

Options for EUR/USD movement from September 14, 2020 are shown on the animated chart.

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Great Britain pound vs US dollar

The movement of Her Majesty's currency GBP/USD from September 14, 2020 will continue to develop in the equilibrium zone (1.2770 - 1.2905 - 1.3055) of the Minute operational scale fork - details of working out the above levels are shown on the animated chart.

If there is a break of the top border ISL38.2 equilibrium zone of the Minute operational scale fork - resistance level of 1.3055 - then the upward movement of GBP/USD will be continued to the boundaries of the channel 1/2 Median Line Minute (1.3180 - 1.3275 - 1.3365) with the prospect of updating local maximum 1.3482 and reaching the upper limit of ISL61.8 (1.3535) equilibrium zone of the Minor operational scale fork.

Breakdown of the lower border of ISL61.8 of the equilibrium zone of the Minute operational scale fork - support level of 1.2770 - option to continue the downward movement of the currency of Her Majesty to the end line FSL Minute (1.2330) and the local minimum 1.2251.

We look at the options for the movement of GBP/USD from September 14, 2020 on the animated chart.

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US dollar vs Japanese yen

The movement of the currency of the "Land of the Rising Sun" USD/JPY will be determined by the development and direction of the range breakout:

  • resistance level of 106.90 - the RL100.0 reaction line of the Minute operational scale fork;
  • support level of 106.10 - the upper border of the channel 1/2 Median Line Minute.

Breakdown of the support level of 106.10 - USD/JPY movement will continue in the 1/2 Median Line channel (106.10 - 105.55 - 105.00) of the Minute operational scale fork with the prospect of reaching the boundaries of the channel 1/2 Median Line (104.55 - 103.20 - 101.90) of the Minor operational scale fork.

Breakdown of the reaction line RL100.0 Minute - resistance level of 106.90 - option to continue the development of the upward movement of the currency of the "Land of the Rising Sun" to the borders of the equilibrium zones of the operational scales forks - Minute (107.50 - 108.30 - 109.10) and Minor (107.75 - 109.10 - 110.50).

The #USDX movement markup from September 14, 2020 is shown on the animated chart.

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The review is compiled without taking into account the news background, the opening of trading sessions of the main financial centers, and is not a guide to action (placing "sell" or "buy" orders).

Formula for calculating the dollar index:

USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036.

Where the power coefficients correspond to the weights of currencies in the basket:

Euro - 57.6 %;

Yen - 13.6 %;

Pound sterling - 11.9 %;

Canadian dollar - 9.1 %;

Swedish Krona - 4.2 %;

Swiss franc - 3.6 %.

The first coefficient in the formula brings the index value to 100 on the start date – March 1973, when the main currencies began to be freely quoted relative to each other.

The material has been provided by InstaForex Company - www.instaforex.com

Treasuries Move Modestly Higher Ahead Of Next Week's Fed Meeting

Trading 12 sept 2020 Commentaire »

After turning higher over the course of the previous session, treasuries saw some further upside during trading on Friday.

Bond prices recovered from an initial drop to end the day modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down 1.6 basis points to 0.669 percent.

Treasuries continued to benefit from their appeal as a safe haven amid the recent volatility shown by stocks on Wall Street.

Stocks have shown a lack of direction over the course of the trading day on Friday following the sharp pullback seen in the previous session.

Traders may also have been looking ahead to the Federal Reserve's latest monetary policy decision scheduled for next Wednesday.

The Fed is widely expected to leave rates at near-zero levels but could make tweaks to its accompanying statement. The central bank's latest economic projections may also attract some attention.

In U.S. economic news, the Labor Department released a report showing consumer prices increased by slightly more than anticipated in the month of August.

The Labor Department said its consumer price index climbed by 0.4 percent in August after advancing by 0.6 percent for two straight months. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices still rose by 0.4 percent in August following a 0.6 percent increase in July. Core consumer prices were expected to edge up by 0.2 percent.

The Fed announcement is likely to be in focus next week along with reports on industrial production, retail sales, homebuilder confidence and housing starts.


The material has been provided by InstaForex Company - www.instaforex.com

Crude Oil Futures Settle Slightly Higher

Trading 12 sept 2020 Commentaire »

Crude oil prices recovered after an early setback on Friday, and despite staying sluggish for much of the day's session, managed to close slightly higher.

Persisting worries about outlook for energy demand due to continued surge in coronavirus cases, and data showing higher crude inventories weighed on the commodity and limited its upside.

West Texas Intermediate crude oil futures for October ended up $0.03 or about 0.08% at $37.33 a barrel.

WTI crude oil futures lost over 6% in the week.

Brent Crude futures advanced $0.16 or about 0.4% to $40.22 a barrel.

U.S. crude inventories increased by about 2 million barrels last week, as against expectations for a drop of 1.3 million barrels.

According to reports, traders are looking to book tankers to store crude oil and diesel as energy demand appears to be trending down to due to rise in new coronavirus cases.

Reports say U.S. gasoline demand fell nearly 2% in the last week of August compared to a week earlier.

The rapidly surging coronavirus cases in India has resulted in an about 20% drop in oil demand from the country, compared to a year ago.

According to Baker Hughes, weekly active oil-rig count in the U.S. has dropped by 1 to 180 this week. Total weekly drilling-ring count has come down by 2 to 254, the report said.


The material has been provided by InstaForex Company - www.instaforex.com

Gold Futures Settle Lower

Trading 12 sept 2020 Commentaire »

Gold prices drifted lower on Friday, snapping a three-session winning streak, as traders looked to take some profits.

The dollar's recovery from early lows contributed as well to the yellow metal's decline.

The dollar index, which was down at 93.10 early on in the session, rose to 93.38 around mid-afternoon and was last seen at 93.31, down just marginally from previous close.

Gold futures for December ended down $16.40 or about 0.8% at $1,947.90 an ounce.

For the week, gold futures gained about 0.7%.

Silver futures for December closed lower by $0.434 at $26.857 an ounce, while Copper futures for December settled at $3.0395 per pound, gaining $0.0410 for the session.

A report released by the Labor Department today showed consumer prices in the U.S. increased by slightly more than anticipated in the month of August.

The report said the consumer price index climbed by 0.4% in August after advancing by 0.6% for two straight months. Economists had expected consumer prices to rise by 0.3%.

Excluding food and energy prices, core consumer prices still rose by 0.4% in August following a 0.6% increase in July. Core consumer prices were expected to edge up by 0.2%.


The material has been provided by InstaForex Company - www.instaforex.com