US CPI: Dollar weakens slightly on historic CPI decline

April CPI has confirmed the enormous impact of the economic closures on consumption and prices, Joseph Trevisani, an analyst at FXStreet, reports.

Key quotes

“Core CPI which does not include food and energy prices dropped 0.4% in April, reported the Bureau of Labor Statistics, the largest one month decline since these records began in 1957.”

“Overall CPI dropped 0.8% in April as expected, which was the largest decrease since the height of the financial crisis in the fall of 2008 doubling the decline in March.”  

“The CPI decline will be understood to be a precursor for the Fed’s preferred core PCE gauge even if it is unlikely to garner a new policy response. The abbreviated currency movement affirms the notion that no Fed action is expected.”

“The best way to terminate deflation is to recreate consumer demand. The dollar’s slowly ebbing risk premium is a corollary until the US economy returns to its historical growth path.”