Overview
US core CPI was on the firm side of expectations, but this had little sustained impact on the USD.
North American session
The USD was not much changed through the North American session, after initially gaining some ground after the slightly stronger than expected US CPI data. GBP and AUD in particular made some gains but these faded late in the session, as did more modest USD losses seen elsewhere.
August’s CPI was as expected on the headline with a gasoline-led rise of 0.6% but a slight disappointment on the core, up 0.3%, or 0.28% before rounding, after two straight gains of 0.2%, which were both rounded up from 0.16%. The modest upside surprise on the core rate is probably not enough to bring a September Fed tightening, but a tightening bias will persist.
European morning session
The USD was generally a little firmer against European currencies through the European morning. Initially, here was a big move lower in GBP/USD in response to the weaker than expected UK GDP data, but by the end of the morning EUR/GBP was little changed just above 0.86, and the USD was generally around 0.2% firmer against European currencies, but otherwise not much changed.
UK GDP fell 0.5% in July, much more than the consensus 0.2% decline, but the 3m/3m trend remained steady at 0.2% as it has for most of this year. The EUR initially fell back against the SEK as well early in the session, but recovered to opening levels just below 11.94 by the end of the morning.
