Markets are Frozen Ahead of US CPI release

Markets are Frozen Ahead of US CPI release

Event of the day:

Today, October 13, the Bureau of Labor Statistics will release the US Consumer Price Index (СPI) m/m and Core CPI m/m.

What to expect?

Yesterday, the Bureau of Labor Statistics released a higher-than-expected Producer Price Index with 0.2% m/m growth in September, meaning producers are still raising prices for goods and services. Therefore, the markets expect CPI m/m to gain the same 0.2% with a 0.4% Core CPI increase. Currently, Core CPI is the most important inflation data, as it shows people's mood to buy non-essential goods (the index excludes food and energy). 

Why should we care? Jerome Powell, the chairman of the Federal Reserve, stated many times the Fed would follow only macroeconomic data. Moreover, it will be the latest CPI release ahead of the Federal Reserve meeting on November 2th. Therefore, the Fed will make its decision according to today's numbers. As a result, it will highly affect the US dollar.

Technical analysis: 

EURUSD, H4 chart

EURUSDH4.png

If CPI or Core CPI numbers are lower-than-expected, EURUSD might reverse towards the upper border of the global descending channel on the D1 timeframe. In this case, the pair will reach 0.9925 in the near term. Higher-than-expected CPI or Core CPI numbers will let bears break through the 0.9650 - 0.9680 support range and bring the pair to 0.9550. 

What else is moving the markets?

  • Analysts expect a significant increase in the Central Bank of England rate at the next meeting.
  • Negative crypto sentiment continues to grow. Today's release might send BTCUSD below 18.000.
  • Buyers defend the range 1660 - 1672 for XAUUSD. Today, the price might increase to 1690.
  • The minutes of the Fed meeting show concerns about sustained high inflation.
  • RBC predicts recession in Canada in 2023, cites aggressive CBR rate hike, rapidly weakening real estate and labor market
  • In case of strong fluctuations in the exchange rate, the Japanese government and the Central Bank promise to carry out more interventions in the JPY. However, interventions do not bring results. The Japanese Central Bank continues to print money instead of raising the rate. USDJPY is moving toward 149.40.

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