US CPI inflation rose steadily during November with headline CPI reaching 2.7% YoY from 2.6%, while core inflation held constant at 3.3% YoY.
Monthly headline CPI rose to 0.3% MoM from October’s 0.2%. Despite the upswing in inflation figures, the CPI print came in line with forecasts. This has markets now pricing in a 97.5% chance of a 25bps cut at next week’s FOMC meeting.
Later today US PPI inflation will follow a similar pattern to the CPI data, with a slight rise in figures that remain close to recent levels overall. Core PPI is expected to reach 3.2% YoY, up from the previous 3.1%.
Jobless Claims will be released today, with expectations at 220K compared to 224K prior.
Initial market reaction from the US inflation data helped the pair hit 1.0536 below falling back to the 1.0500 level as market makers remain cautious ahead of today’s ECB meeting at 1:15pm GMT.
The 25bps cut has been priced in for a while, so not much market movement is expected. This cut will bring rates from 3.25% to 3.00%, keeping in line with the ECB’s gradual easing stance and slowly reaching their target rate.
The SNB cut rates by 25bps, lowering their policy rate to 0.75%. Initial market reaction has USDCHF hitting 0.8893, posting 0.73% gains following the announcement.
Cable headed towards 1.2800 before settling once again around 1.2750 as US CPI data came in line with market expectations.
The pair is struggling to find any momentum as a light UK economic calendar keeps cable in a tight range between the 1.2700 to 1.2800 levels.
