We’re about to see Uncle Sam’s latest inflation figures!
What exactly are traders expecting? More importantly, will today’s numbers boost USD higher against its major counterparts?
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/USD’s long-term trend line resistance as traders priced in their risk sentiment. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
EIA: crude inventory climbed 3.9M barrels last week, distillate storage still below average
Facebook parent Meta cuts 11,000 jobs, 13% of workforce
Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse
AU MI inflation expectations rise from 5.4% to 5.0% in November
RICS UK house inquires index fell from -36 to -50, fastest decrease since the start of Covid in 2020
Japan machine tool orders fell for the first time in two years, down 5.4% y/y in October
Russian Defence Minister orders troops to leave Ukrainian city of Kherson
Fed’s Kashkari: talks of pivot “entirely immature”
FTX investment now worth zero, VC giant Sequoia says
Asian shares fall ahead of U.S. CPI, crypto worries mount
ECB’s economic bulletin at 9:00 am GMT
U.S. CPI reports at 1:30 pm GMT
U.S. initial jobless claims at 1:30 pm GMT
BOC Gov. Macklem to talk labor market at 4:50 pm GMT
BusinessNZ manufacturing index at 9:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: EUR/USD
EUR/USD 1-Hour Forex Chart
The biggest story of the next couple of hours will be the U.S. inflation report!
Analysts see consumer prices slowing down from an annual rate of 8.2% to 7.9%-8.0% in October while the core figure could also dip from 0.6% to 0.5%.
Traders aren’t betting the farm on a significant slowdown though.
For one thing, they probably don’t have much to bet after this week’s “red wave” of losses from big names like $TSLA, $META, $DIS and the crypto market.
Inflation reports have also surprised to the upside in the last few months.
So, unless we see a significant downside surprise that could change the Fed’s plan to keep raising interest rates “slower but higher,” we’ll likely see USD take back some pips against its counterparts.
EUR/USD, which is already sporting a Head and Shoulders pattern at the 1.0000 – 1.0100 previous resistance zone, could drop to the .9000 to .9950 at the report’s release.
I’m not discounting further USD losses though.
If today’s numbers support a Fed pivot sooner than later, or if today’s market themes encourage risk-taking, then EUR/USD could pop back up to 1.0100 and even make new November highs.