CPI (Consumer Price Index)

### Old news that still moves everything The US Consumer Price Index is published by the Bureau of Labor Statistics at 8:30am ET on a pre-announced date around the middle of the month, and it always covers the *previous* month. The 14 July 2026 release, for instance, reports June's prices. So the data is already weeks stale by the time it lands, and it still detonates the dollar. That tells you what the market is really trading: not the past month's shopping bills, but the **next** central bank decision. ### What the floor is actually looking at - **Headline vs core.** Core strips out food and energy, the two components whose swings often say little about the underlying trend. Core is the one policymakers weight more heavily, so it often drives the bigger reaction even when the headline grabs the news coverage. - **Month-over-month vs year-over-year.** The annual figure is partly an artefact of what happened twelve months ago falling out of the calculation. The monthly figure is the fresh information. - **The surprise, not the level.** Nobody trades "inflation is high". They trade the gap between the print and the consensus forecast. This is why a tenth of a percentage point away from expectations is enough to shove majors hard, while a scorching number that lands exactly on forecast can barely register. ### The chain that makes it a currency event CPI feeds the market's guess about interest rates. Rate expectations move bond yields. Yields move the currency. That is the whole mechanism, and it is why the move does not end at 8:31am. The number reshapes the rate story that gets re-argued at the next FOMC meeting, which is why the effect leaks across the following days. Worth knowing, and most people do not: the Federal Reserve's 2 percent goal is defined on the **PCE price index**, not on CPI. The Fed says so on its own site. CPI is the earlier, louder, more tradeable proxy, so the market reacts to it first and hardest, but it is not the target itself. ### The intuition that gets beginners hurt From the shops, inflation feels like your money is worth less, so surely the currency falls. In FX it usually runs the other way, at least at first: hot inflation implies a more hawkish central bank, higher rates, and a stronger currency. But treat that as a mechanism, not a law. It holds only while the market believes the central bank will actually respond. When that belief cracks, the same hot print can sell the currency off instead. The number never speaks for itself. The expected reaction to it does.