Forex Today: 10/11: US Inflation Expected To Cool Today

(MENAFN- Daily Forex) The pace of US inflation is expected to show a cooling in today's CPI release. Economists forecast that consumer prices increased by 0.3% in October, down from September's 0.6%, while Core CPI is expected to slow to 0.2% from 0.3%. However, this is a forecast of slower monthly price increases, not falling annual inflation: the headline annual rate is expected to rise to 3.9% from 3.7%. The data are due at 8:30am New York time and might impact the US Dollar, stock markets, and some commodities like Gold. Today's inflation figures could determine whether markets maintain their strong expectations of a December Federal Reserve rate hike. Traders are pricing approximately an 84% probability of an increase following Friday's stronger-than-expected employment report. An inflation reading in line with forecasts may therefore be insufficient to change the Fed outlook materially. A meaningful downside surprise would present a greater challenge to those expectations, while a hotter release could support the US Dollar. Stock markets have staged a much stronger recovery than the subdued rebound seen early yesterday. The S&P 500 Index gained 2.35% on Monday, its biggest one-day advance since April, while the Nasdaq Composite rose approximately 2.7%, its strongest session in more than four months. Falling Crude Oil prices and reduced fears of renewed military action against Iran helped restore risk appetite. This is a significant bullish development, although concerns about AI spending and valuations have not disappeared. Asian stock markets are extending the recovery this morning. South Korea's KOSPI rose more than 5%, while Japan's Nikkei gained approximately 3% in early trading. The strength of these advances is a clear change from yesterday morning's tentative price action. However, today's US inflation release remains an important test of whether the rebound can develop into a more sustained advance. Crude Oil has continued to fall as traders reduce the premium for a possible resumption of the Iran war, with WTI now well established below the former highly significant support level at $87.68. Brent is trading near its lowest levels in roughly 10 weeks, with prices around $92 per barrel in early trading. President Trump's indication that he intends to hold off on fresh strikes has encouraged hopes of negotiations. The decline in energy prices is helping equities, but a diplomatic settlement has still not been secured, and probably never will be. It seems quite likely that the USA will simply give up on the war. The US Dollar is continuing to fall. Monday's combination of falling oil prices and rising stocks encouraged buying of risk-sensitive currencies: AUD/USD gained nearly 1% to trade around $0.6921, while NZD/USD rose to approximately $0.5624. Both were relatively steady in early Asian trading today as traders waited for CPI. GBP/USD is rising, with the British Pound behaving like the strongest major currency today in the Forex market. Gold is easing back after yesterday's advance, but remains above $4,100. The precious metal gained more than 1% on Monday before encountering some profit-taking ahead of today's inflation release. Its recovery above $4,000 remains intact, although bulls have yet to establish a sustained move through the previously identified $4,200 resistance area. The next directional move could depend on how CPI changes expectations for US interest rates and the Dollar.

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