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This data affects the currency markets as it is indicative of overall inflation. When consumer prices rise, it signals that inflation is rising as well. The central bank then reacts by rising their interest rates in order to counter this in order to keep inflation within its targets. Conversely, when consumer prices are falling, it signals that inflation is falling. If it falls below target and is heading towards negative, central banks may cut rates in order to combat this. Why is this important to traders? Well, interest rates also have an affect on the valuation of a currency. High interest rates may make assets from the host country more attractive, which causes demand for that currency to rise. The opposite happens when interest rates are low. I hope this helps you understand a little more! :)
