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US Dollar Weighed Down by Inflation Numbers

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Consumer price index falls for the first time since January

According to the US Bureau of Labor Statistics, the month-over-month consumer price index (or CPI), which measures the average change in price of goods and services purchased by households over a given period of time, fell by 0.1% in August. This was due to the fall in the gasoline index, which decreased by 4.1% after rising for the previous three months.

The food index was 0.2%, primarily driven by increase in prices of eggs, fresh fruits, and fresh vegetables. The year-over-year CPI number for August was 0.2%.

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Dollar slightly down ahead of Fed meeting

The US dollar index reached a low of 95.16 as inflation, a major parameter examined by the Federal Reserve in its monetary policy decision, was negative. On September 16, the dollar index ended the day at 95.42, which was a fall of 0.20% for the day.

The dollar is expected to take further cues from the FOMC (Federal Open Market Committee) meeting, which ended on September 17.

Impact on the market

The Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) and the iShares TIPS Bond ETF (TIP) were trading flat for the day except during the data release. These ETFs ended the day moving by 0.04% and -0.03%, respectively.

On the stock front, FedEx Corporation (FDX) lost much of the gains it made on Wednesday, as it fell by 2.84% on September 16, 2015. Hewlett-Packard (HPQ) and Netflix (NFLX) were some of the top gainers for the day, rising by 5.02% and 4.96%, respectively.

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