The US dollar remained in a good position during last week's trading and until the middle of this week, it is on a continuous rise for the ninth day in a row, and is approaching its three-month highs, traders seem to surrender to the pricing of a 25 basis point interest rate cut by the Fed for November so far, and the soft landing scenario seems more and more confirmed every day.
As the probability of lowering interest rates by 25 basis points for the next month is now more than 86%, according to the CME Group's Fed Watch tool, traders have completely got rid of pricing a move of 50 basis points, and there is a small probability of less than 14% that the Fed will prove interest in November without any change, and all this change occurred after the jobs report was released last Friday, which reflected market expectations after positive data by more than expectations by adding 254 thousand jobs.
So, what's next ?
On the agenda today we have the inflation report represented by the US Consumer Price Index, and it is worth noting that inflation has not been a big focus over the past two months, but the focus has been more on employment data, unemployment rates and how the US economy is holding up.
And so far it has not been as bad as expected at the end of July or early August.
Returning to today's inflation data, today's figures should not give much, especially if the report coincides with the estimates.
Core annual inflation is expected to remain at 3.2%, while core annual inflation is expected to fall to 2.3% from 2.5% previously.
As long as inflation does not rise again, this justifies the Fed to continue to cut interest rates at the next meetings, but the only question will be what pace of interest rate cuts.
Thus barring any bullish surprises, today's report would justify the market pricing for a 25 basis point move in November.
