US inflation data will take centre stage tomorrow, with the August CPI report potentially having a major influence on the Federal Reserve’s interest rate decision next week.
Markets are expecting headline CPI to rise 0.4% month-on-month, up sharply from July’s 0.1% increase, with higher energy costs from the war in the Middle East expected to play a significant role.
Annual headline inflation is forecast around 3.4–3.5%. Core CPI, which excludes food and energy and will arguably be the more important number for the Fed, is expected to rise 0.2% on the month, with the annual rate forecast to ease to 2.4% from 2.5%. The release comes at a crucial point for US monetary policy. Recent stronger employment data and Chair Kevin Warsh’s hawkish Jackson Hole message have increased expectations of another rate hike, although Governor Christopher Waller has indicated that further evidence of cooling inflation could support leaving rates unchanged.
This leaves markets particularly sensitive to any deviation from expectations. A core CPI print of 0.3% or higher would likely strengthen expectations for a September hike, pushing Treasury yields and the US dollar higher. Conversely, a softer 0.1% print or lower could significantly increase expectations that the Fed remains on hold, likely seeing both yields and the dollar. With the Fed meeting scheduled for September 15–16, tomorrow’s CPI has the potential to be one of the most market-moving US data releases of recent months.
USDJPY has seen huge moves recently and a surprise result either side should see big figure moves in the pair. It has fallen over 700 pips in just over a week and a stronger print could really put the cat amongst the pigeons with the pair likely to rally strongly against recent flows and government wishes, although traders will be prepared for intervention if it pushes too far. A weaker print will reinforce recent moves with the initial target on the daily chart, the long-term trendline support around 152.00.
Resistance 2: 158.41 – 200 Day Moving Average
Resistance 1: 155.28 – Former Trendline Support
Support 1: 152.08 – 2026 Low and Trendline Support
Support 2: 145.47 – September 2025 Low
The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC does not warranty, guarantee or make any representations, or assume any liability regarding financial results based on the use of the information in the site.
News, views, opinions, recommendations and other information obtained from sources outside of www.ic.com, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC assumes no responsibility for the content of any linked site.
The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site. IC is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property.
Risk Warning: Trading in securities involves significant risk. Prices may fluctuate and securities can become entirely valueless. You may incur losses that exceed your potential profits, and in some cases, losses may exceed the amount you have deposited. Securities, futures, options, and contracts for differences are complex financial instruments and are not suitable for all investors. Engaging in such transactions requires a sound understanding of the associated risks. Please read and ensure you fully understand our Risk Disclosure.
Our leverage is dynamic and may change at any time. Such changes may affect your positions and margin requirements. You are responsible for monitoring your positions and maintaining sufficient margin at all times
