The U.S. Bureau of Labor Statistics (BLS) will release key CPI data for November at 1:30 p.m. GMT on Thursday.
This inflation report will not include the CPI figures for October, nor will it include monthly CPI figures for November, due to insufficient data collection during the government shutdown. Therefore, investors will be particularly interested in the annual CPI and core CPI figures to assess inflation trends and XEM how the Fed might adjust its policy.
What can we expect from the next CPI data report?
According to the revised CPI figures, US inflation in November is projected to rise at an annualized rate of 3.1%, slightly higher than in September. The Core CPI, excluding volatile food and energy items, is also expected to increase by 3% during the same period.
TD Securities experts predict that annual inflation will rise more sharply than expected, but core inflation will remain stable.
“We forecast the US CPI to rise 3.2% in November – the highest level since 2024. The main reason is rising energy prices, while core CPI will remain stable at 3.0%,” the team of experts explained.
How might the US CPI report affect the USD?
Ahead of Thursday's US inflation report, investors are assessing a 20% chance that the Fed will cut interest rates by another 25 basis points in January, according to the CME FedWatch Tool.
The delayed official jobs report from the BLS, released on Tuesday, showed that nonfarm payrolls fell by 105,000 in October and rose by 64,000 in November. Additionally, the unemployment rate increased to 4.6% from 4.4% in September. These figures did not significantly impact market expectations for the Fed's decision in January, as the sharp drop in jobs in October was anticipated due to public sector job losses from the government shutdown.
In a blog post late Tuesday, Atlanta Fed President Raphael Bostic said the jobs report did not change the current policy stance. He also noted that numerous surveys indicate rising input costs and businesses are trying to maintain profitability by increasing prices.
If the annual CPI inflation rate is announced at 3.3% or higher, the likelihood of the Fed maintaining its policy in January will be confirmed, and the USD could appreciate immediately. Conversely, if the CPI is only at 2.8% or lower, the market will expect the Fed to cut interest rates soon, putting significant downward pressure on the USD in the short term.
Eren Sengezer, European session analyst at FXStreet, has provided a short-term technical outlook on the US Dollar Index (DXY):
“Technically, in the short term, the downtrend remains dominant for the USD Index, however, there are signs that the downward momentum is weakening. The Relative Strength Index (RSI) on the daily chart has recovered above 40, and the USD Index remains above the 50% Fibonacci retracement level of the uptrend from September to November.”
“The 100-day Simple Moving Medium (100-day SMA) Vai as a pivot point at 98.60. If the USD index breaks above this level and holds Vai support, technical sellers may be discouraged. The next resistance level would then be the 38.2% Fibonacci retracement at 98.85, before the 99.25-99.40 zone, where both the 200-day SMA and the 23.6% Fibonacci retracement are present.”
"Conversely, key support forms at the 61.8% Fibonacci retracement level at 98.00, followed by 97.40 (78.6% Fibonacci retracement) and 97.00 (rounded mark)."
