The US Consumer Price Index is expected to increase by 3.1% year-over-year in November, which is a small rise compared to September.
The inflation report will not have the monthly CPI numbers in it.
The November inflation numbers might affect how much the US Dollar is worth by changing what people expect the Federal Reserve to do with interest rates in January.
The United States Bureau of Labor Statistics will release the important Consumer Price Index data for November on Thursday at 1:30 PM GMT.
The inflation report will not include CPI numbers for October and will not release monthly CPI data for November because data collection stopped during the government shutdown. Because of this, investors will look closely at the annual CPI and core CPI numbers to understand how inflation trends might affect the Federal Reserve's plans for interest rates.
What can we expect in the upcoming CPI data report?
Based on the CPI data, the US inflation rate is expected to go up by 3.1% in November, which is a little higher than the 3% increase seen in September. The core CPI inflation, which doesn't include the food and energy parts that can change a lot, is also predicted to increase by 3% during this time.
TD Securities analysts think that annual inflation will go up more than expected, but they believe the core inflation will stay the same. They say they expect the US CPI to increase by 3.2% year-over-year in November, which is the fastest growth since 2024. This increase is because energy prices are going up, but they expect the core CPI to remain at 3.0%.
How might the US Consumer Price Index report impact the US Dollar?
As the US inflation data comes out on Thursday, investors are thinking there's a nearly 20% chance the Fed might lower interest rates by another 25 basis points in January, based on the CME FedWatch Tool.
The BLS released a delayed official employment report on Tuesday, showing that Nonfarm Payrolls dropped by 105,000 in October and increased by 64,000 in November. The Unemployment Rate also went up to 4.6% from 4.4% in September. These numbers didn’t change what the market expected about the Fed’s decision in January. The big drop in payrolls for October wasn’t a surprise because many government jobs were lost during the shutdown.
In a blog post written late on Tuesday, Atlanta Fed President Raphael Bostic said the mixed jobs report didn't change the outlook for policy. He also mentioned that several surveys show higher costs for businesses and that companies are trying to keep their profits by raising prices.
If the headline annual CPI inflation rises by 3.3% or more, it might confirm the Fed keeping interest rates unchanged in January and lead to a quick rise in the US Dollar (USD). However, if the annual inflation rate is 2.8% or lower, traders might expect the Fed to cut rates in January, which could cause the USD to face strong selling pressure right away.
Eren Sengezer, the European Session Lead Analyst at FXStreet, gives a short technical analysis of the US Dollar Index (DXY) and explains:
The short-term technical picture shows that the downward trend for the USD Index is still present, but there are some indications that the negative movement might be slowing down. The RSI on the daily chart moves back above 40, and the USD Index stays above the 50% Fibonacci retracement level from the September to November upward trend.
The 100-day Simple Moving Average (SMA) is acting as a key level at 98.60. If the USD Index goes up past this level and holds it, it might become support, which could make technical sellers less likely to sell. In that case, the next possible resistance level could be the Fibonacci 38.2% retracement at 98.85, before reaching the 99.25 to 99.40 range, where both the 200-day SMA and the Fibonacci 23.6% retracement are found.
On the negative side, the Fibonacci 61.8% retracement level acts as an important support at 98.00, followed by 97.40 (which is the Fibonacci 78.6% retracement level) and 97.00, which is a round number level.
The inflation report will not have the monthly CPI numbers in it.
The November inflation numbers might affect how much the US Dollar is worth by changing what people expect the Federal Reserve to do with interest rates in January.
The United States Bureau of Labor Statistics will release the important Consumer Price Index data for November on Thursday at 1:30 PM GMT.
The inflation report will not include CPI numbers for October and will not release monthly CPI data for November because data collection stopped during the government shutdown. Because of this, investors will look closely at the annual CPI and core CPI numbers to understand how inflation trends might affect the Federal Reserve's plans for interest rates.
What can we expect in the upcoming CPI data report?
Based on the CPI data, the US inflation rate is expected to go up by 3.1% in November, which is a little higher than the 3% increase seen in September. The core CPI inflation, which doesn't include the food and energy parts that can change a lot, is also predicted to increase by 3% during this time.
TD Securities analysts think that annual inflation will go up more than expected, but they believe the core inflation will stay the same. They say they expect the US CPI to increase by 3.2% year-over-year in November, which is the fastest growth since 2024. This increase is because energy prices are going up, but they expect the core CPI to remain at 3.0%.
How might the US Consumer Price Index report impact the US Dollar?
As the US inflation data comes out on Thursday, investors are thinking there's a nearly 20% chance the Fed might lower interest rates by another 25 basis points in January, based on the CME FedWatch Tool.
The BLS released a delayed official employment report on Tuesday, showing that Nonfarm Payrolls dropped by 105,000 in October and increased by 64,000 in November. The Unemployment Rate also went up to 4.6% from 4.4% in September. These numbers didn’t change what the market expected about the Fed’s decision in January. The big drop in payrolls for October wasn’t a surprise because many government jobs were lost during the shutdown.
In a blog post written late on Tuesday, Atlanta Fed President Raphael Bostic said the mixed jobs report didn't change the outlook for policy. He also mentioned that several surveys show higher costs for businesses and that companies are trying to keep their profits by raising prices.
If the headline annual CPI inflation rises by 3.3% or more, it might confirm the Fed keeping interest rates unchanged in January and lead to a quick rise in the US Dollar (USD). However, if the annual inflation rate is 2.8% or lower, traders might expect the Fed to cut rates in January, which could cause the USD to face strong selling pressure right away.
Eren Sengezer, the European Session Lead Analyst at FXStreet, gives a short technical analysis of the US Dollar Index (DXY) and explains:
The short-term technical picture shows that the downward trend for the USD Index is still present, but there are some indications that the negative movement might be slowing down. The RSI on the daily chart moves back above 40, and the USD Index stays above the 50% Fibonacci retracement level from the September to November upward trend.
The 100-day Simple Moving Average (SMA) is acting as a key level at 98.60. If the USD Index goes up past this level and holds it, it might become support, which could make technical sellers less likely to sell. In that case, the next possible resistance level could be the Fibonacci 38.2% retracement at 98.85, before reaching the 99.25 to 99.40 range, where both the 200-day SMA and the Fibonacci 23.6% retracement are found.
On the negative side, the Fibonacci 61.8% retracement level acts as an important support at 98.00, followed by 97.40 (which is the Fibonacci 78.6% retracement level) and 97.00, which is a round number level.
