US CPI inflation to hint on another Fed rate step in November or not – Commerzbank

FX Analysts at Commerzbank offer a brief preview of the United States Consumer Price Index (CPI) data due for release on Thursday, stating that “the data is of particular interest as the views differ on whether there will be another Fed rate step in November or not.”

Additional quotes

“Of course, 25bp more or less is not decisive, we have always underlined that. But a further rate step might be the straw that breaks the camel’s back, with the sum total of the rate hikes dampening the economy to such an extent that the Fed will have to lower interest rates earlier and more rapidly next year than is currently expected.”

“In short: it could make the soft landing the Fed and the market are currently expecting seem questionable.”

“The prospect of another rate step due to higher inflation rates might support the dollar short-term; but if market participants begin to question the prospect of a soft landing of the economy, this might thwart the dollar.”

“That is why nobody wants to properly position themselves ahead of the publication, in particular as a lot of positive developments have already been priced into the dollar.”