Upside surprise on US CPI data to end the recent correction in the Dollar – ING

FXStreet Insights Team FXStreet

US Consumer Price Index (CPI) data for October is out at 13:30 GMT. The figures will have implications for Fed policy, risk assets and the Dollar, economists at ING report.

USD Index to trade 109.50-110.50 range

“We favour a 0.5% core MoM figure, with the range of analyst expectations stretching from 0.3% to 0.6%.”

“Today's release will have some bearing on what the market prices for the Fed meeting on 14 December, where a 56 bps rate increase is currently priced. Today's CPI data will not be the final say on that decision (we have jobs data and another CPI release before then), but it can set the tone regarding the Fed's comfort level.”

“Expect the Dollar and the positively correlated bond and equity markets to trade off today's data – where any upside surprise could do some damage to the recent benign risk environment and end the recent correction in the Dollar.”

“DXY to trade 109.50-110.50 range, with a slight upside bias.”

See – US CPI Preview: Forecasts from 13 major banks, inflation coming down only slowly

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD struggles near 0.7150 as Fed hike bets and Middle East risks underpin USD

AUD/USD kicks off the new week on a weak note and hovers near Friday's low, around mid-0.7100s, as the US Dollar holds up on rising Fed rate-hike bets, bolstered by the US CPI. Furthermore, escalating Middle East tensions and clashes in the Strait of Hormuz underpin the safe-haven USD. However, hawkish RBA expectations could help limit deeper losses for the Aussie.

USD/JPY holds steady near mid-153.00s as traders await Fed/BoJ rate decisions

USD/JPY consolidates near a seven-month low touched last Tuesday as traders move to the sidelines ahead of the FOMC decision on Wednesday and the BoJ policy update on Friday. Meanwhile, a more hawkish repricing of the BoJ's normalization path supports the Japanese Yen, while rising Fed rate-hike bets and geopolitical risks underpin the US Dollar, leading to the pair's subdued price action at the start of the new week.

Gold consolidates above $4,300 as traders await Fed rate decision this week

Gold struggles to capitalize on Friday's modest bounce from sub-$4,300 levels and kicks off the new week on a subdued note as traders move to the sidelines ahead of a slew of central bank events. Meanwhile, the latest US inflation figures reaffirmed September Fed rate-hike bets and cap the non-yielding bullion. Moreover, escalating US-Iran tensions act as a tailwind for the safe-haven US Dollar, keeping XAU/USD bulls on the back foot.

Week ahead: Fed, BoJ and BoE decide amid inflation dilemma

A crucial central bank week looms for markets as both the Federal Reserve and Bank of Japan are under pressure from all sides, with their credibility at stake. The Bank of England looks set to have an easier ride, at least for now, while inflation releases will be watched too as war continues to rage in the Middle East.

CFTC Report: Japanese Yen reversal leads a broader positioning reset

The week in one sentence: Yen positioning swung back into net longs in the week to September 8, leading to a 103.0K-contract improvement. Canadian Dollar shorts also fell sharply, while Oil buying accompanied another price rise. Euro, Sterling and Swiss Franc positioning weakened despite firmer currencies, leaving those moves unconfirmed by speculative flows.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.