CPI Data Release to Determine Fed's Next Move Amid Dollar Volatility
The upcoming July CPI (Consumer Price Index) data release will be crucial in determining the Federal Reserve's next move on interest rates. Market participants are closely watching the data to gauge whether inflation trends will alter expectations for a rate decision in September.
Chris Turner, analyst at ING Groep, noted that last Friday's weak US employment data did not significantly weigh on the US dollar. He also pointed out that inflation trends remain the core variable driving the Federal Reserve's next move.
The market consensus expectations for today's July CPI data are relatively moderate: headline CPI is expected to rise by 0.1% month-on-month, and core CPI by 0.2% month-on-month, corresponding to year-on-year declines to 3.4% and 2.5%, respectively.
The US Dollar Index (DXY) is currently trading at 99.8349, having fallen below the short- and medium-term moving averages. The technical picture remains under pressure with expanding green bars on the MACD and a weak RSI.