U.S. headline inflation likely to have accelerated in October

U.S. headline inflation data for the month of October is set to be released tomorrow. According to a TD Economics research report, the consumer price inflation is likely to have accelerated to 2.5 percent in the month, owing to the gasoline prices and base effects. Also, core rate is expected to have recovered to a sequential rise of 0.2 percent after recording a print of 0.1 percent for two straight months. On a year-on-year basis, core rate is likely to have come in at 2.2 percent.

Prior misses were mainly due to sharp falls in apparel and used vehicle prices which is likely to normalize. OER will be given attention this month. It had recorded a weak rise of 0.2 percent, its softest since December 2014. The print appears like a blip given homeowner vacancy rates, and OER and rents are expected to rebound in October, supporting a 0.2 percent rise in the core index.

“Turning to core goods, we look for apparel to take back some of its previous weakness, though err on the side of caution as a decline can’t be ruled out. Used vehicle prices are also coming off a 3 percent drop, and further declines, albeit much more modest, can’t be excluded as well”, added TD Economics.

At 13:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 73.5784. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex