Morning Forex Fundamental: USD

Morning Forex Fundamental: USD

'Overall, despite the sharp rise in headline prices and some modest firming in core consumer inflation pressures' - Millan Mulraine, a macro strategist at TD Securities

Consumer prices in the world’s largest economy soared in February at the fastest pace in more than three years, as the cost of gasoline surged, the Labor Department reported Friday. The U.S. consumer price index jumped 0.7% in February, after being flat in the preceding month and posting the biggest gain since June 2009. At the same time, gasoline prices rocketed 9.1%, after falling by 3.0% in January. Despite the increase in consumer prices, longer-term trends remain within the Federal Reserve’s target.

Also Friday, Thomson Reuters/University of Michigan said that the confidence among Americans fell unexpectedly this month, signalling cooling in spending, the biggest part of the economy. A gauge of consumer sentiment fell to 71.8, the lowest level since December 2011, down from 77.6 in February. Analysts, however, expected an increase of 78. A possible reason for such a decline might be automatic across-the-board federal spending cuts, which will weigh on the economy and hiring.

'Overall, despite the sharp rise in headline prices and some modest firming in core consumer inflation pressures, the overall backdrop for consumer prices remains favourable, providing further breathing room for the Fed,' wrote Millan Mulraine, a macro strategist at TD Securities, in a research note.