DXYThe U.S. Bureau of Labor Statistics is releasing the Consumer Price Index (CPI) report, with forecasts anticipating an annual CPI increase of 2.9%, matching the previous reading. The core CPI, excluding food and energy prices, is predicted to remain above the Federal Reserve's (Fed) target at 3.1% year-over-year. Monthly forecasts suggest a 0.3% increase in both CPI metrics.
Potential Market Impact:
US Dollar (DXY): The CPI data might influence the US Dollar’s (USD) price action in the short term. Higher-than-expected CPI figures may strengthen the USD, while lower figures could weaken it. Rising inflationary expectations may get a nod if the US CPI comes in higher than expected. The US Dollar Index is rallying off range support, opening the door for extended gains if the CPI data fuels a DXY rally.
A stronger dollar typically has a negative correlation with the price of gold, as gold is often priced in U.S. dollars while The Fed is expected to maintain its hawkish stance. The market anticipates the central bank will likely begin its easing cycle in June
there is on going Uncertainty about tariffs and trade policy change which could weigh on the US Dollar Index (DXY). The rising inflationary expectations may get a nod if the US CPI comes in higher than expected, while any new tariff announcements will likely add to the USDs appeal.
If the core CPI m/m exceeds the expected 0.3%, the US Dollar Index (DXY) could experience a boost
A higher-than-expected core CPI reading could make it more likely that the Federal Reserve will continue to raise interest rates
Higher interest rates typically make the dollar more attractive to investors, leading to increased demand and a stronger dollar
An increase in the CPI prints, particularly the core reading could then in theory be responsible for another leg higher in the US Dollar index (DXY
EURUSD,AUDUSD,GBPUSD,USDJPY,USDZAR,USDCHF, will be watched on highers than expected data print to win in the direction of DOLLAR
