The U.S. Bureau of Labor Statistics (BLS) will release the Consumer Price Index (CPI) data, which is important for the month of November on Thursday at 13:30 GMT
This inflation report will not include CPI figures for October and will not provide monthly figures for November due to a lack of data collection during the U.S. government shutdown. Therefore, investors will closely monitor the annual CPI and Core CPI figures to assess how inflation trends may impact the Federal Reserve's policy direction.
What to expect in the next CPI report from the United States?
Based on measurements through changes in CPI, inflation in the United States is expected to rise at an annual rate of 3.1% in November, slightly higher than the September figure, while Core CPI, excluding volatile food and energy categories, is also expected to rise by 3% during the same period.
Analysts from TD Securities expect annual inflation to rise significantly more than anticipated, but expect Core CPI to remain stable.
They explain that we expect the US CPI to increase by 3.2% compared to the same period last year in November, which will be the fastest increase since 2024, driven by higher energy prices, while Core CPI is expected to remain steady at 3.0%.
How does the consumer price index of the United States affect the USD currency?
Before the US inflation report on Thursday, investors see nearly a 20% chance that the Federal Reserve will cut interest rates by another 25 basis points in January, according to data from the CME FedWatch Tool.
The official employment report from the BLS, which was delayed, revealed on Tuesday that Nonfarm Payrolls decreased by 105,000 jobs in October and increased by 64,000 jobs in November. Additionally, the unemployment rate rose to 4.6% from 4.4% in September. These figures do not alter market expectations regarding the Fed's decision in January, as the sharp decline in payrolls in October is not surprising considering the job losses in the public sector during the government shutdown.
In a blog post published on Tuesday evening, Raphael Bostic, president of the Atlanta Federal Reserve, argued that the mixed employment report does not change the policy outlook and added that there are several surveys showing that input costs are rising, and companies still intend to maintain profits by raising prices.
If the annual CPI significantly rises to 3.3% or higher, it may reinforce the Fed's tendency to maintain policy at the January meeting and immediately support the USD. Conversely, if the annual inflation figure is only 2.8% or lower, it may lead investors to believe that the Fed will lower interest rates in January, in which case the USD may also face heavy selling immediately.
Eren Sengezer, head of European session analysis at FXStreet, presents an initial technical view for the US Dollar Index (DXY) and explains that
Short-term technical trends indicate that the downward direction of the USD index remains, but there are signs that negative pressure is weakening. However, the Relative Strength Index (RSI) on the daily chart has recovered above 40, and the USD index still stands above the Fibonacci 50% retracement level from the uptrend in September to November.
The 100-day simple moving average (SMA) is positioned as a pivot level at 98.60, and if the USD index can rise above this level and confirm it as support, technical sellers may reduce their confidence. In this case, the Fibonacci 38.2% retracement level may become the next resistance at 98.85 before reaching the zone of 99.25-99.40, which is the position of the 200-day SMA and the Fibonacci 23.6% retracement.
On the other hand, the Fibonacci 61.8% retracement level will become a key support at 98.00 before reaching 97.40 (Fibonacci 78.6% retracement) and at 97.00 (the round number level).