Continued Dollar Uptrend: Focus on Market Movements Following US CPI Release
The dollar has strengthened its upward momentum as we enter October. This is largely due to Fed Chair Powell’s cautious stance on significant rate cuts and the stronger-than-expected US employment data. Additionally, various factors are supporting the dollar’s strength, including rate cut expectations from the ECB and the Bank of England, Prime Minister Ishiba’s cautious approach to Bank of Japan rate hikes, ongoing Middle East risks, and China’s economic stimulus measures. Currently, the dollar index is recording its highest level since August 16th.
Focus on US CPI Release
Today, the US Consumer Price Index (CPI) for September will be released. Market expectations are for a month-on-month increase of +0.1% and a year-on-year increase of +2.3%, indicating a slight slowdown. The core index is expected to rise by +0.2% month-on-month, while year-on-year, it is anticipated to remain steady at +3.2%. If a gradual reduction in inflation is confirmed, it could bolster expectations for a soft landing in the economy and increase support for a moderate rate cut path. The dollar’s movement following the release and the subsequent reaction in the stock market are likely to influence USD/JPY.
Simultaneously, initial jobless claims data will also be released.
Trading Strategy
I plan to closely monitor the dollar’s movements after the CPI release and remain flexible to respond to either buying or selling opportunities.
