The US consumer price index for October will be announced today. The headline inflation is expected to be about +7.9% from the previous year, which is attracting attention as something that will have a major impact on the direction of future US monetary policy, and is expected to decline from the previous +8.2%. After peaking at 9.1% in June, growth has slowed for three straight months. The point is whether this trend will continue this time. And depending on the degree of divergence from market expectations, either up or down, the initial reaction of dollar buying or dollar selling is likely to be seen.
Next, I would like to pay attention to the core year-on-year change. This was the highest level of +6.6% in September last time. The market forecast for October is +6.5%, and a slight slowdown is expected. It can be said that the fact that the core year-on-year rate of change remains at a high level indicates that inflation is widespread. The market is likely to react depending on how far the numbers deviate from expectations this time around. However, if the headline number and the direction are opposite, the price movement will be quite nervous. On the other hand, when the headline and core results align in the same direction, the impact on the market will be greater. Keep in mind that weak numbers can lead to dollar selling and strong numbers can lead to dollar buying.
After the initial reaction of the dollar market and US bond yields, it is expected that the stock market will react with risk appetite and aversion. For the dollar-yen pair, if the yen moves sharply in the direction of depreciation, the government and the Bank of Japan will be cautious about yen-buying interventions.
As mentioned above, we assume that weak numbers will lead to dollar selling and strong numbers will lead to strong dollar buying. I want to ride on the movement after the US consumer price index.