USD Rallying Midweek
The US Dollar is rising firmly today ahead of the keenly awaited November CPI print due this afternoon. The greenback is currently rebounding higher on the back of a correction lower from the late November highs. An uptick in Fed easing expectations for the current month had seen DXY coming under selling pressure in recent weeks. Indeed, even a stronger-than-forecast NFP release last week was unable to dent December rate-cut expectations. However, Fed speak ahead of the pre-FOMC blackout period was less than decisive and there is still a chance that an upside surprise in CPI today could unseat December rate cut chances, or at the very least lead the Fed to pause tightening again beyond this month.
Forecasts for Today
In terms of the numbers, the market is looking for headline CPI to print 2.7%, annualised, last month, up from 2.6% prior. On the monthly readings, forecasts are for headline at 0.3% from 0.2% prior and core unchanged at 0.3%. If estimates are confirmed, this is unlikely to derail a December cut, though USD should remain bid. If we see an upside surprise, however, this will likely see December rate cut probabilities dropping, leading to a firmer rise in USD. Finally, if we see inflation undershoot forecasts today, this will cement easing expectations, with USD likely to unwind as a result.
Technical Views
DXY
Following the correction from Nov highs, DXY is now rebounding firmly off the trend line retest and the 105.97 level. With momentum studies turning higher, focus is on another test of 107.25 and YTD highs above. 104.05 remains key support to watch.
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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.