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Tomorrow we get one of the key bits of data that is likely to drive currency moves for the next couple of years: US Inflation Data.
December saw the US fall back on its recovery from covid as new cases peaked to record highs. So, it’s not surprising should some of the economic dynamics have fallen back to pandemic levels.
But the more pressing issue right now is where the market sees inflation going.
The Dollar Index has been rising for a few days. This is mostly due to a return of risk-off sentiment, and expectation of higher interest rates.
US bond yields have gone higher, increasing demand for the currency and depressing growth in the stock market. And that is related to inflation expectations, which is why even though the Fed is concentrating more on employment, for now, we still need to pay attention to CPI figures.
What we are looking for
There is a rush of different CPI data coming out at the same time. But the two bits we want to pay attention to are the CPI ex-food and e...
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