US Inflation Expected To Spike Today
US Inflation Due
The US Dollar is on watch today as traders prepare to receive the latest US inflation report this afternoon. Annualised headline CPI is forecast to surge higher to 3.4% from 2.4% prior. On the monthly readings, Wall Street is looking for headline to rise to 1% from 0.3% and core to 0.3% from 0.2% prior. If the headline YoY figure rises in line with forecasts this will serve as strong evidence as the spike in inflationary pressures linked to the Iran war, putting greater pressure on the Fed with USD likely to push higher in this scenario.
Hawkish FOMC Mins
The FOMC minutes this week showed that policymakers were concerned over the path of inflation, which they now expect to take longer to bring back down to target as a result of inflation risks from the Iran war. If CPI jumps a full 1% as expected, this should encourage greater hawkishness within the bank, bringing the prospect of rate hikes into view near-term. As of t east meeting, the bank was still forecasting one cut this year, while the market has moved to price out easing and is now slowly pricing in a hike. Clearly, any upside surprise today would be the most bullish scenario for USD while any undershooting of this forecast should see USD continue to hold around current levels as traders await incoming news on the US/Iran negotiations front.
Technical Views
DXY
For now, DXY remains below the 99.15 level with 98.24 the next bear target while that resistance holds. If we spike higher today, 100.36 is the key objective for bulls with any break of that level signalling a stronger bullish breakout underway for the Dollar.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.