Forex Today: Uptick in US Inflation Expected Today – 11 December 2024

Markets will be closely watching the release of US CPI (unemployment) data today.

1. The USA will see the release of highly important inflation data today which will show the month-on-month and annualized CPI metrics. Annualized inflation is expected to show a small uptick from 2.6% to 2.7%. The Fed has made clear it has a target of 2%. While inflation is not historically high, after declining dramatically it is proving to be quite sticky the closer it gets to 2%. The data will be closely watched due mostly for its importance is predicting the rate cut path which will be pursued by the Federal Reserve. Currently, the CME FedWatch tool suggests an 86% chance of a 0.25% cut at the Fed’s next meeting on 18th December. A higher chance of rate cuts due to a surprise of lower inflation than expected would likely knock the US Dollar and boost US stock markets.
2. The Bank of Canada will be holding a policy meeting today and is widely expected to cut its interest rate by 0.50%. Any deviation from this would probably cause volatility in the Canadian Dollar.
3. Following yesterday’s policy meeting at the Reserve Bank of Australia which strongly hinted that rate cuts would be happening soon, the AUD/USD currency pair touched a new 4-month low below $0.6372.
4. Major stock market indices which reached record highs last week fell yesterday for a second consecutive day, but the drops were nothing special. The bullish trends survive in the S&P 500, the NASDAQ 100 Index, and in the DAX
5. In the Forex market, since today’s Tokyo open, the Japanese Yen has been the biggest gainer and the Australian again the biggest loser. The EUR/USD currency pair remains in a valid long-term bearish trend, and is threatening to fall back below the big round number at $1.0500.
6. Cocoa futures traded at a new 7-month high yesterday and made a strongly bullish close, which was the highest closing price in over 6 months. Cocoa has seen a strong increase in value over the past few weeks, and the market will remember the spectacular rally in Cocoa in 2023 which saw the price of the superfood triple within only 4 or 5 months. Trend traders will be interested in being long of Cocoa futures. Unfortunately for retail traders, the smallest Cocoa future available has a position size of $100,000 but there is a Cocoa exchange-traded commodity (ETC) ticker COCO available on the London Stock Exchange which is very affordable. The “ETC aims to replicate the Bloomberg Cocoa Sub Total Return Index (BCOMCCTR) by tracking the Bloomberg Cocoa Sub Excess Return Index.”
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