Forex Flash: US CPI, Housing Starts and Industrial Production eyed – TD Securities

FXstreet.com (Barcelona) - The US Consumer Price Index will be attract attention, with falling gasoline prices being an important driver, partially offsetting the upward pressures from higher natural gas and food prices. “We expect headline CPI to rise by +0.1%/mth, following the chunky +0.7% rise the month before. On an annual basis, favorable base effects lower the rate from 2.0% to 1.7%/yr (mkt 1.6%)”, wrote analyst Annette Beacher, expecting also a relatively subdued Core CPI, at +0.2%/mth and 1.7%/yr (mkt 2.0%).

In regard to housing starts, cold weather, slower new home sales and evidence of weakening domestic momentum in March should temper construction activity, and so TD Securities analysts expect a fall from 917K to 910K in March.

“While this represents a sharp drop from the 982K new homes started in December, the level of starts are 30% higher than year ago levels”, they wrote, also expecting the pace of IP growth to slow to +0.3%/mth in March from +0.7%/mth with both ISM manufacturing and non-manufacturing surveys signaling a dramatic weakening in domestic production activity. “The relatively cold weather in March should bolster utility production by +1.5%/mth, while manufacturing sector activity should slow markedly in March, rising at +0.1%/mth”, Beacher concluded.