US Inflation Up Next
All eyes are on the US Dollar today as traders brace for the latest set of US inflation results. The market is expecting annualised CPI to prise to 2.6% from 2.4% last month. If seen, the data should further dilute near-term Fed easing expectations, creating support for a fresh driver higher in the Dollar. Traders have been scaling back their easing projections in the wake of Trump’s re-election with expectations that his protectionist and pro-growth policies will lead to a fresh rise in inflation. USD has been firmly higher recently, reflecting that outlook.
USD Downside Risks Muted
If data today undershoots forecasts, there is room for USD to correct a little near-term. Given the bull run we’ve seen since late September, the market is certainly ripe for a long squeeze. However, with Trump due to take office in January, any correction is likely to be short-lived and USD remains vulnerable to further upside in response to nay rhetoric or headlines from Trump ahead of January.
Powell on Deck
Beyond today’s data, traders will then be looking to Fed chairman Powell who speaks tomorrow. If Powell is seen to acknowledge the risks/uncertainty linked to a fresh Trump presidency, this could easily fuel a further push higher in USD as traders bring down December rate hike chances.
Technical Views
DXY
The rally in the DXY has seen the market breaking firmly higher with price now testing above the bear trend line from 2023 highs. Price is now testing the 105.97 resistance which, if broken, opens the way for a test of 107.25 above. To the downside, 104.05 remains key support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.