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Forex Today: US CPI inflation data and Fedspeak set to stir markets

Here is what you need to know on Wednesday, November 13:

The Trump trades-inspired broader market rally takes a breather early Wednesday as the focus shifts back toward the economic data, anticipating the all-important US Consumer Price Index (CPI) report slated for release in American trading.

The US Dollar (USD) pauses its ongoing upsurge alongside the US Treasury bond yields as traders book profits on their long USD positions in the lead-up to the US inflation showdown. The data is critical to gauging the Federal Reserve’s (Fed) easing trajectory.

Markets are pricing in about a 62% chance of another 25 basis points (bps) interest rate cut in for December, down from around 83% a month ago, according to the CME Group's FedWatch Tool.

US President-elect Trump’s hardline policies on trade and lower taxes are seen as inflationary, calling for higher interest rates while supporting the Greenback across its major rivals.

Additionally, lingering China’s economic concerns and pre-US CPI nervousness keep traders on the edge, leaving major currencies gyrating in a narrow range.  

USD/JPY is sitting at its highest level since July 30, near 155.00. The absence of Japanese verbal intervention and uncertainty over the Bank of Japan (BoJ) rate hikes amid the fragile minority government in Japan remains a drag on the domestic currency.

AUD/USD has entered a downside consolidation phase below 0.6550, with risk-off flows checking its recovery. NZD/USD struggles above 0.5900 as investors move away from risk assets. USD/CAD retakes 1.3950 amid subdued WTI oil prices.

EUR/USD falls back to test the 1.0600 support after hitting a yearly low at 1.0594 on Tuesday. German political uncertainty and policy divergence between the Fed and the European Central Bank (ECB) undermine the pair.

GBP/USD remains vulnerable near 1.2740, having stretched lower after the mixed UK labor data. BoE policymaker Catherine Mann’s speech is next in focus.  

Gold holds a tepid bounce just above $2,600, within a touching distance of two-month lows. US CPI data and a bunch of Fed speakers are eagerly awaited for the next big move in the bright metal.

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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