US: Headline CPI to hold steady at 2.9% y/y in July - TD Securities

"We expect headline CPI to hold steady at 2.9% y/y in July, reflecting a 0.2% m/m increase and likely marking the peak in y/y inflation for the year," TD Securities analysts argue.

Key quotes

"Gasoline prices will lift headline CPI on a y/y basis, but should be offset by some deceleration in food inflation as we eye continued weakness in the latter."

"Core CPI inflation should hold steady at 2.3% y/y on a third consecutive 0.2% m/m increase. We expect a firm increase to be underpinned by a pickup in core goods along with sustained strength in shelter costs."

"With CPI expected to remain broadly stable, we see little impact on the USD and FX markets more broadly. This is compounded by the fact that other majors like EUR and GBP remain plagued by idiosyncratic political issues (Italy budget, Brexit and the BOE punting policy most notably), which should leave little to no appetite for investors to get involved. We note however, that with the USD remaining elevated but in a stable range, any sign of a slippage in inflation momentum could challenge the USD's dominance. But, given the developments abroad, we would expect this to be short-lived."