The US Consumer Price Index is at the center of investors assessing expectations for Federal Reserve interest rates in January.

The US Bureau of Labor Statistics (BLS) will publish the important Consumer Price Index (CPI) data for November on Thursday at 1:30 GMT.

The inflation report will not include October’s CPI numbers, nor will it provide monthly versions of November’s CPI due to a lack of data collection during the government shutdown. Therefore, investors will examine the annual CPI and core CPI data to assess how inflation dynamics could affect the outlook for Federal Reserve (Fed) policy.

What can you expect in the next CPI data report?

Depending on the change consumer price index, US inflation is expected to increase at an annual rate of 3.1% in November, slightly higher than the September reading. It is also expected to grow Inflation The core CPI, which excludes the volatile food and energy categories, fell by 3% during the period.

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Analysts at TD Securities expect annual inflation to rise at a faster-than-expected pace, but see core inflation remaining steady.

“We are looking for the US CPI to increase 3.2% year-on-year in November – the fastest rate since 2024. They will fuel the increase in energy prices, as we are looking for the core CPI to remain stable at 3.0%”, they explain.

How could the US CPI report affect the US dollar?

With US inflation due on Thursday, investors see a chance of around 20%. To lower the interest rate by 25 basis points from the Fed in January, according to the CME FedWatch tool.

The official deferred employment report from HMRC on Tuesday showed that non-farm payrolls fell by 105,000 in October and rose by 64,000 in November. In addition, the unemployment rate rose to 4.6% from 4.4% in September. These numbers did not change the market price of the Fed’s decision in January, since the sharp drop in wages in October was not surprising, given the loss of government jobs during the shutdown.

In a blog post published late Tuesday, Atlanta Fed President Raphael Bostic argued that the mixed jobs report did not change the political outlook and added that there are “several surveys” that indicate higher input costs and that companies are determined to maintain their margins by raising prices.

A significant increase, of 3.3% or more, in the annual CPI of the title could confirm the policy of the Fed in January and push. US Dollar (USD) With immediate reaction. On the other hand, a weak annual inflation of 2.8% or less may prompt market participants to cut interest rates in January. In this scenario, the US dollar may come under intense selling pressure with an immediate reaction.

Eren Sengezer, Lead European Session Analyst at FXStreet, provides a brief technical outlook on the US Dollar Index (DXY) and explains:

“The short technical perspective suggests that the downside bias remains for the US Dollar Index, but there are indicators that indicate a loss in the negative momentum. The Relative Strength Index (RSI) in the daily chart has recovered above 40, while the US Dollar Index maintains above the 50% Fibonacci retracement of the trend from September to November.”

“The 100-day Simple Moving Average (SMA) corresponds as a pivot level at 98.60. If the US Dollar Index rises above this level and confirms its support, technical sellers may be discouraged. In this scenario, the 38.2% Fibonacci retracement may be the next resistance level at 98.85 before the SMA205-9994 zone. and the retracement of Fibonacci are 23.6%.

“On the upside, the 61.8% Fibonacci retracement level forms a key support level at 98.00 before 97.40 (78.6% Fibonacci retracement) and 97.00 (round level).”