Another month, another weak US inflation reading

US dollar skids to the lows of the day

The US dollar just can’t get a break. Inflation has been the thorn in its side all year long. An interesting question, is what would inflation be if the US dollar hadn’t fallen 10% this year?

The Fed wants to blame one-time items like cell phone costs but it’s been five years of inflation missing estimates. That’s a lot of one-off items.

The dollar is unimpressed. It got some momentum when Irma mostly missed Florida, then Congress passed the debt ceiling without any problems, the Fed was more-hawkish than expected and then Republicans rolled out a huge tax break.

The US dollar is higher this week but it’s nothing to get excited about. USD/JPY rose to a two-month high of 113.26 on Wednesday but has faded back to 112.27, up only fractionally on the week.

The Fed is talking again about its confidence in a return to 2% inflation, but that line has turned into a bit of a joke.

I also get the sense that the market is losing faith that Yellen is coming back and that Trump will appoint someone (or a few people) who are willing to tinker.

Or maybe it’s just month-end and the dollar will get back in gear on Monday.

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