U.S. Consumer Price Index 12/14/2007 8:30am EST

Facts - The CPI’s impact on the Fed’s rate policy will once again be the primary focus for the currency market with more attention on core CPI. - CPI m/m is expected at 0.6% while core CPI m/m is expected at 0.2%. Increased energy costs are expected to fuel a higher headline number. - Thursday's PPI came in at a 30+ year high as a result of the sharp rise in energy prices, which rose a record 14.1%. Gasoline prices rose a record 34.8% and home heating oil prices rose 31.5%, the fastest gain since August 1990. But the core PPI number was only 0.4% which still doubled the estimates. - The Fed's statement raised concerns that rising energy and commodity prices would contribute to price pressures well beyond the central bank’s tolerance level. Therefore, a higher read for the most part may be priced in. Trade Analysis - Extreme caution is advised as the impact of the CPI number has recently been reduced since focus has been put on other factors in the economy. It should be considered that any trades taken on this event risk would be best served with a substantial divergence between the actual print and the official consensus.