The September US PPI, to be released today, will serve as a precursor to tomorrow’s US Consumer Price Index (CPI). The YoY forecast for PPI stands at +1.6%, similar to the previous figure, and the Core YoY is expected to rise from +2.2% to +2.9%. It is anticipated that PPI will demonstrate persistent inflationary pressures, even as the headline figures remain relatively low.
Regarding the FOMC Meeting Minutes, it is expected that they will confirm the hawkish tone set during the previous meeting, indicating the potential for one more interest rate hike later this year and providing insights into the outlook for interest rates next year. However, it’s important to consider that recent comments from US monetary authorities have started leaning towards keeping interest rates unchanged, and the geopolitical risks in the Middle East make it challenging to implement monetary tightening.
While the market is expected to move cautiously overall, considering tomorrow’s key event, the September US Consumer Price Index, there might be deviations from market expectations in the Producer Price Index, or new information regarding the Middle East situation, which should be monitored.
Furthermore, the US Dollar Index has declined for six consecutive business days until yesterday, suggesting a potential shift in the USD’s previous upward trend since July. The direction of the US Dollar Index after the release of the crucial US inflation data will be closely observed.
In the foreign markets, upcoming economic indicators include the US MBA Mortgage Applications (09/30 – 10/06), the US Producer Price Index for September, and Canadian Building Permits for August. In Europe, the final version of the German Consumer Price Index will be published, although no significant economic indicators are scheduled for release.
The Israel vs. Hamas conflict continues to intensify, with no signs of resolution in sight. However, the September US Producer Price Index (PPI) is highly regarded as an essential metric for assessing inflation. As such, it has the potential to induce significant movements in the USD.
If the USD weakens, it may offer an opportunity for traders to capitalize on the momentum that is likely to follow.