Impact of CPI Data and Anticipated FOMC Meeting on the Dollar Index

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Short-Term Dollar Index Outlook – Wednesday, December 3, 2023 The Dollar Index reacted by first dipping to an intraday low of 103.445 following the release of the Consumer Price Index (CPI) data last night. Month-on-month, the November CPI rose marginally to 0.1% from the October number 0%. The core rose 0.3% from 0.2%. The year-on-year number, however, dipped to 3.1% from 3.2% with the core unchanged at 4%. Within the hour pf the CPI data, the index rose back to 104.075 before settling at 103.900. Tonight, we have the producer price index plus the much-anticipated Federal Open Market Committee meeting (FOMC) at 03:00am Singapore time. Traders are ramping up expectations of a cut in interest rates in 2024. Last night’s CPI data still suggests inflation is not low enough for the Fed to make any policy change in regards to interest rates. Everything depends on what the Fed chairman says at the press conference following tonight’s FOMC. Technically, there is scope for further gains in the index towards the 104.500 level before resuming its downward trend especially if the index closes back below the November close of 103.275 in a daily basis.