Markets wait for incoming CPI

Source: Dukascopy Bank SA
Today, the US Consumer Price Index data release at 12:30 GMT is set to impact the financial markets.

Market participants are about to look at whether the inflation data sets will show a decline in the pace of price increases in the United States or a decrease. In general, higher than expected inflation is expected to pressure the US Federal Reserve to keep USD monetary policy tight, which would strengthen the US Dollar. On the other hand, lower than forecast inflation readings are going to signal that the US Fed should not continue to tighten policy.

Namely, higher inflation would increase the value of the USD. Lower inflation numbers would decrease the value of the USD. All pairs and assets traded against the USD are bound to adjust to the data.

The market consensus forecast is for a monthly increase of 0.4% of the CPI. A 5.0% increase of the CPI year on year. The monthly change in Core Consumer Price Index is expected to be at 0.3%.
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