Upside surprise on US CPI data to end the recent correction in the Dollar – ING

US Consumer Price Index (CPI) data for October is out at 13:30 GMT. The figures will have implications for Fed policy, risk assets and the Dollar, economists at ING report.

USD Index to trade 109.50-110.50 range

“We favour a 0.5% core MoM figure, with the range of analyst expectations stretching from 0.3% to 0.6%.” 

“Today's release will have some bearing on what the market prices for the Fed meeting on 14 December, where a 56 bps rate increase is currently priced. Today's CPI data will not be the final say on that decision (we have jobs data and another CPI release before then), but it can set the tone regarding the Fed's comfort level.” 

“Expect the Dollar and the positively correlated bond and equity markets to trade off today's data – where any upside surprise could do some damage to the recent benign risk environment and end the recent correction in the Dollar.”

“DXY to trade 109.50-110.50 range, with a slight upside bias.”

See – US CPI Preview: Forecasts from 13 major banks, inflation coming down only slowly