The Consumer Price Index (CPI) inflation data for November will soon be released by the Bureau of Labor Statistics (BLS) at 13:30 GMT (21:30 WIB). Inflation is expected to weaken, reinforcing the view that the Federal Reserve (Fed) has finished raising interest rates for the year as the final meeting concludes.
 
The US Dollar (USD) has stabilized in December after declining by about 3% each month against major currencies in November.
 
Although Fed officials remain committed to a data-driven monetary policy approach, the Fed is expected to keep the interest rate at the 5.25%-5.5% range following the last monetary policy meeting of the year.
 
However, persistent declines in inflation and signs of an increasing slowdown in the labor market have led the market to anticipate policy changes. According to the CME Group FedWatch Tool, there is a more than 40% probability that the Fed will cut interest rates by 25 basis points as early as March.
 
The US CPI inflation figures have the potential to influence market positions regarding policy changes and could trigger a significant reaction in USD exchange rate valuation ahead of the Fed’s monetary policy announcement, along with the release of the revised Summary of Economic Projections (SEP) on Wednesday.
 
What to Expect in the Upcoming CPI Data Report?
 
The US Consumer Price Index is expected to increase by 3.1% year-on-year in November, slightly slowing from the 3.2% rise in October. The Core CPI, which excludes volatile food and energy prices, is anticipated to remain stable at 4% during the same period. Monthly CPI and Core CPI are expected to rise by 0.1% and 0.3%, respectively.
 
Oil prices continued to decline, falling 7% in November after a roughly 10% drop in October. Meanwhile, used car prices dropped 2.1% in November, resulting in an annual decline of 5.8% during the period, according to the Manheim Used Vehicle Index.
 
Reviewing the US inflation report for November, TD Securities analysts forecast a rebound in core CPI inflation to 0.3% month-over-month from 0.2% in October, while the headline figure increases to 0.1%.
 
They noted that the report shows inflation rising mainly from the core goods segment, while the shelter components (OER/rent) are expected to remain varied. Although their core CPI inflation estimate is about 0.29% month-over-month, they assess the risks as largely balanced for November.
 
Meanwhile, the Prices Paid Index from the ISM Services PMI survey slightly decreased to 58.3 in October from 58.6, while the Prices Index from the Manufacturing PMI rose to 49.9 from 43.8. This data reflects persistent input price pressure in the services sector in November, while deflation in manufacturing input costs slowed.
 
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Disclaimer!
 
The analysis of “US CPI” is based on fundamental and technical perspectives from reliable sources and is not intended as advice or solicitation. Remember that this content aims to enrich the reader’s information. Always conduct independent research before using any other forex information as a basis for your trading decisions.
 
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