CPI in a Few Hours, Expect Volatility as Whales Position Early

US November CPI data is finally out after the shutdown gap, with inflation likely to shape January Fed rate outlook and US dollar moves.

The US CPI data update has become one of the most-watched releases this month. 

Traders have waited weeks for fresh price data after the government shutdown disrupted reporting. So far, November numbers now offer the first clear look at inflation trends since September, and this update is expected to come in a few hours.

US CPI Data Update Arrives After Data Silence

The Bureau of Labor Statistics will release the November Consumer Price Index at 13:30 GMT on Thursday. 

The agency skipped the October report due to the shutdown, and investors now rely on annual readings. While headline CPI tracks total price changes, core CPI strips out food and energy prices and Both offer insight into price pressure across the economy.

So far, economists expect annual CPI inflation to reach 3.1%, which would sit slightly above September’s 3% reading. Anaoysts also expect core CPI to hold near 3.0%.

Why the US CPI Data Update Matters Now

Federal Reserve policy depends on price stability and jobs. Considering how inflation remains above the 2% target, this trend has kept policymakers on their toes.

The US government shutdown in the latter half of the year also complicated the picture as the missing data continues to cloud trend analysis. As a result, annual CPI now carries more influence than usual.

In all, markets currently price a near 20% chance of a January rate cut.

Jobs Data Adds Tension Before CPI Release

Labor market figures arrived earlier this week, with the delayed Nonfarm Payrolls report showing job losses in October. Payrolls fell by 105,000 and according to the report, November added only 64,000 jobs.

Unemployment rose to 4.6% from 4.4% in September and wage growth slowed as well.

Those figures failed to shift rate expectations as shutdown-related job losses reduced their surprise factor.

US CPI Data Update and the Dollar Reaction

Currency markets tend to react fast to inflation news, and the US Dollar often moves within seconds of the release.

A headline CPI print near 3.3% or higher would likely support the Dollar, and that outcome would favour a January hold on rates. Yields could move higher as traders adjust.

On the other hand, a softer print near 2.8% or lower could pressure the Dollar and traders may lean toward a January cut under that scenario.

The reaction thus depends on how far results stray from forecasts, as small surprises may lead to choppy moves and larger misses could drive clearer trends.

Related Reading: Fed Expected to Approve Rate Cut During FOMC Meeting on Dec. 10

What Traders Should Watch After the Release

Across the market, focus will shift to three areas after the data hits.

The first of these is rate expectations. Futures pricing may move quickly, so investors should consider watching the January meeting odds.

The second is Treasury yields, as tising yields often support the Dollar. Falling yields, on the other hand, tend to lift gold and risk assets (like Bitcoin).

Finally, the third area is equity sentiment. Stocks struggled after recent jobs data and the new CPI reading could either calm nerves or deepen investor worries.

Note that Holiday trading conditions may exaggerate any price reactions, so investors should be prepared for unexpected price movements.