The US Bureau of Labor Statistics (BLS) is set to release the Consumer Price Index (CPI) data for November on Thursday at 13:30 GMT. Analysts are predicting this report to show an enormous jump in inflation. On that basis, they project the headline year-on-year CPI inflation rate to be no less than 3.1%-3.3%, or higher. Such figures could reaffirm the Federal Reserve’s policy hold in January while potentially bolstering the US Dollar’s value immediately following the announcement.
The unemployment rate has shot up lately—from 4.4% in September to 4.6%. This increase makes for a considerably more complicated economic picture. Meanwhile, the BLS is preparing to release some key inflation figures. The markets are hanging on every datapoint at this point to see how these numbers will influence monetary policy and market sentiment.
Anticipated Inflation Trends
The November inflation report is particularly noteworthy as it will be the first to exclude October’s CPI release. That omission occurred after data collection was upended by the recent government shutdown. According to Wall Street economists, annual headline inflation is expected to be around 3.1%. They expect core CPI, which strips out volatile food and energy costs, to climb to 3.0% or so. All of this data is very important as this is the information that directly impacts the Federal Reserve’s policy decisions.
Investors tend to hang on every core inflation print. These numbers serve as a target for many of the world’s central banks, which aim to maintain inflation at a relatively stable level, often around 2%, over time. When core CPI is above target, the standard response is to raise interest rates. A negative reading against the target usually results in rate cuts. Market participants are increasingly assigning a nearly 20% chance of a 25-basis-point rate cut in January. That makes this next report potentially the most impactful in shaping the Fed’s view.
“We look for the US CPI to rise 3.2% y/y in November – its fastest pace since 2024. The increase will be driven by rising energy prices, as we look for the core CPI to remain steady at 3.0%,” – TD Securities analysts.
Economic Indicators and Market Reactions
Here’s why the CPI data’s implications go far beyond inflation readings. That expected jump in CPI would likely bolster the Federal Reserve’s hawkish pivot. Atlanta Fed President Raphael Bostic has recently underscored that weak jobs reports don’t change policy outlooks. On that second point, he highlighted several recent surveys that indicate increasing costs for inputs. As a result, companies are increasing their prices to protect their margins.
Market analysts are looking at technical reassurances such as the USD Index. Currently the index is at a key support level of 98.60, right on its 100-day Simple Moving Average (SMA). The latest Relative Strength Index (RSI) has bounced back above 40. This is very positive because we are still in a bearish trend for the USD Index. There are indications that the negative momentum is decaying.
“The near-term technical outlook suggests that the bearish bias remains intact for the USD Index, but there are signs pointing to a loss in negative momentum.” – Eren Sengezer.
Broader Implications for Economic Policy
Regardless, the release of the September CPI data next week will be an important indicator of ongoing inflation dynamics within the United States. The Federal Reserve watches these indicators very closely. Their expertise guides policy decisions on the money supply that shape economic growth and stability at fundamental levels. How the market reacts to this report will be a key test for the USD’s resilience and shape the overall investor cautiousness in the days ahead.
All stakeholders should be prepare for the sharpest economic report to be released this year. All eyes are on how these inflationary trends will shape upcoming monetary policy and affect larger financial markets. Among the things that could go awry, expectations are sky-high for rising inflation. The effects of this report’s results will set financial conditions for months to come, apparently into next year.