Inflation: The Rollercoaster No One Asked For 🎢💰

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Hold onto your wallets, folks! The United States (US) Bureau of Labor Statistics (BLS) is about to drop the Consumer Price Index (CPI) data for November this Thursday at 13:30 GMT. Bring popcorn! 🍿

Now, here’s the twist: we won’t be seeing October’s CPI figures because, surprise, surprise, the government decided to take a little vacation-AKA, a shutdown. So, investors are left peering into the crystal ball of annual CPI and core CPI prints, trying to decipher how inflation might mess with the Federal Reserve’s (Fed) plans. It’s like watching a soap opera, only with fewer dramatic love interests. 📉

What to expect in the next CPI data report?

Brace yourselves! Inflation is projected to rise at an annual rate of 3.1% in November, which is just slightly more exciting than September’s snooze-fest. And don’t forget the core CPI, which excludes food and energy because, apparently, those are too volatile-much like my moods during tax season. They say it will also rise 3%. Who knew inflation could be so predictable? 🙄

TD Securities analysts, who definitely didn’t get their crystal balls from the same discount store as everyone else, think annual inflation will hit 3.2% in November-the fastest pace since the good ol’ days of 2024. They attribute this increase to rising energy prices. Thanks, gas prices! Always there to ruin our lives. ⛽😩

“We look for the US CPI to rise 3.2% y/y in November – its fastest pace since 2024. The increase will be driven by rising energy prices, as we look for the core CPI to remain steady at 3.0%,” they explain.

How could the US Consumer Price Index report affect the US Dollar?

As we gear up for the inflation showdown on Thursday, investors are eyeing a nearly 20% chance of another 25-basis-point Fed rate cut in January. It’s like watching a game show where everyone loses. 🎉

The BLS finally released the delayed official employment report, revealing that Nonfarm Payrolls took a nosedive-down by 105,000 in October but bouncing back with a modest rise of 64,000 in November. Meanwhile, the Unemployment Rate crept up to 4.6% from 4.4% in September. Apparently, this didn’t shock anyone, considering the government job losses during the shutdown. Because who needs jobs anyway? 🤷‍♂️

Atlanta Fed President Raphael Bostic weighed in with his thoughts, claiming the mixed jobs report wouldn’t change the policy outlook. He mentioned that there are “multiple surveys” indicating higher input costs. Translation: businesses are finding creative ways to charge you more for the same stuff, like adding a ‘convenience fee’ to your morning coffee. ☕💸

If we see a jump to 3.3% or higher in headline annual CPI inflation, it could solidify a Fed policy hold in January and give the US Dollar (USD) a nice boost-talk about a win-win! On the flip side, if the numbers come in soft at 2.8% or lower, market participants might start leaning towards a January Fed rate cut. In that case, the USD could face some serious selling pressure. It’s like watching your favorite team lose in the finals. 😱

Eren Sengezer, our friendly neighborhood European Session Lead Analyst at FXStreet, shared a technical outlook for the US Dollar Index (DXY). Apparently, the bearish bias is still hanging around, but there are hints of a loss in negative momentum. Who knew technical analysis sounded like the plot of a drama? 🎭

“The near-term technical outlook suggests that the bearish bias remains intact for the USD Index, but there are signs pointing to a loss in negative momentum. The Relative Strength Index (RSI) indicator on the daily chart recovers above 40 and the USD Index holds above the Fibonacci 50% retracement of the September-November uptrend.”

“The 100-day Simple Moving Average (SMA) aligns as a pivot level at 98.60. If the USD Index rises above this level and confirms it as support, technical sellers could be deterred. In this dream scenario, the Fibonacci 38.2% retracement could act as the next resistance level at 98.85 ahead of the 99.25-99.40 region, where the 200-day SMA and the Fibonacci 23.6% retracement are located.”

“On the downside, the Fibonacci 61.8% retracement level forms a key support level at 98.00 before 97.40 (Fibonacci 78.6% retracement) and 97.00 (round level).”

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2025-12-18 09:18