Dollar Strength Continues, Focus on U.S. Consumer Price Index (CPI) Tonight
The U.S. dollar remains on an upward trajectory. In October, the strong U.S. economic data and the anticipation of the U.S. presidential election fueled the “Trump trade,” and reports showed a tight race in support between Trump and Harris leading up to the November 5 election. While the latest U.S. employment data fell short of expectations, it is attributed to the effects of hurricanes and major strikes, reaffirming the strength of the U.S. job market. As a result, with Trump’s victory confirmed, the dollar’s upward momentum has accelerated, and the dollar index has reached its highest level since May.
Stock Market Adjustments and Focus on U.S. CPI Release
Meanwhile, in the U.S. stock market, the major indices reached record highs before experiencing some profit-taking, and the fervent dollar buying has slowed somewhat. In this context, tonight’s U.S. October Consumer Price Index (CPI) release closely watched.
U.S. CPI Forecast and Inflation Outlook
The forecast for the CPI is as follows:
- Year-on-year: +2.6% (previously +2.4%)
- Core year-on-year: +3.3% (same as the previous reading)
- Month-on-month: +0.2%
- Core month-on-month: +0.3%
It is expected that the momentum of disinflation will pause for now. While Federal Reserve Chairman Jerome Powell has indicated a short-term rise in inflation, he has stated that it will not affect the disinflation process. Market expectations for a 25bps rate cut in December’s Fed meeting remain intact.
Potential Resurgence of Dollar Buying and the Trump Trade
If the CPI exceeds expectations, there could be a renewed surge in dollar buying. The “Trump trade” has become deeply ingrained in the market and may continue to be a dominant theme in the future.
Other Key Indicators and Speaking Events
Aside from the U.S. CPI, the following key economic indicators are scheduled for release:
- France: Unemployment Rate (Q3)
- U.S.: MBA Mortgage Applications Index (Nov 2 – Nov 8)
As for speaking events, notable speeches will come from:
- Mann, Bank of England Committee Member
- Kashkari, Minneapolis Fed President
- Williams, New York Fed President
Particularly, Musharraf, St. Louis Fed President, is expected to give a speech on the U.S. economy and monetary policy, which will attract attention from the market.
Today’s Key Focus: U.S. Consumer Price Index (CPI)
The major focus today is the U.S. Consumer Price Index (CPI) release at 22:30. The market will closely monitor the subsequent movement of the U.S. dollar.
