Markets are holding their breath as the US June CPI is just a few hours away

Asian markets delivered mixed results, while European shares opened slightly lower amid geopolitical instability in the Middle East, which weighed on investor sentiment. Attention now shifts to today’s U.S. Consumer Price Index (CPI) release, a key event that could introduce further market volatility and impact expectations regarding Federal Reserve policy adjustments.

Market sentiment remains cautious and sideways as investors await the U.S. inflation data for clearer guidance on interest rate trajectories. This follows the June Federal Open Market Committee (FOMC) minutes, which highlighted divisions among policymakers amid persistent inflation risks. As market participants prepare for a potentially volatile New York trading session, the upcoming CPI figures stand as the most significant data release this week, likely shaping future monetary policy decisions given the Fed’s continued cautious stance.

June CPI Preview

The U.S. Department of Labor is scheduled to release the June consumer price index report today at 12:30 GMT. The CPI measures changes in the cost of a basket of goods and services and serves as a primary indicator of inflation or deflation. Analysts forecast headline CPI inflation to moderate to 3.8%, down from the previous 4.2%. On a monthly basis, CPI is expected to decline by 0.1%, which would mark the first monthly decrease since May 2020. Core CPI, which excludes volatile food and energy prices, is anticipated to slow slightly to 2.8% from 2.9%, indicating that underlying inflationary pressures are continuing to ease.

U.S. Dollar Performance Ahead of Inflation Report

The U.S. Dollar Index (DXY), which tracks the dollar against a basket of major currencies, showed moderate gains in early European trading on Tuesday. However, upward momentum remains limited as market participants adopt a cautious stance ahead of the inflation data, preferring to await fresh information before committing to new directional trades. Currently, the DXY is trading near 101.10, reflecting a slight decline over the past eight hours but still hovering near 13-month highs, just below the 98 mark, after retreating from intraday peaks amid mixed market signals.

 

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