The increase in oil prices that has occurred since September is expected to have an impact on American inflation.
The initial expectation of the consumer price index (CPI) forecast report in America shows the expectation of a "decrease" in the value of inflation.
See below for preliminary estimates of consumer price index data reports that have been released by world economic market analysts.
Consumer price index ahead of expectations
CPI, excl. food & energy (MoM) 0.3% 0.3%
CPI (YoY) 3.7% 3.6%
Core CPI (YoY) 4.3% 4.1%
We see the increase in world oil prices that has continued since the beginning of September to have an impact on the increase in the inflation rate in America.
The minutes of the FOMC meeting that were published early this morning are seen to have failed to change market sentiment.
The report states that the FOMC committee members are in favor of maintaining the existing interest rates for a longer period.
Nevertheless, the preliminary data of the "FED FUND RATE" projection has shown as much as 5.6% for the year 2023, giving an indication that the possibility of an interest rate increase for the year 2023 remains open.
September Producer Price Index (PPI) report
The PPI is seen to have increased by 2.2% on an annual basis, making it an increase of 2% in September compared to 1.6% for August 2023. This producer price index has increased due to the increase in oil prices that has occurred throughout September.
As such, we expect tonight's CPI data report to see an increase in the inflation reading on the September data release.
Based on trends and components of the consumer price index in America, there is a risk of upside since the release of NFP employment data earlier this month, where a sharp increase in employment opportunities and the maintenance of income ladders are able to encourage consumers in the country to spend more.
Nevertheless, the interest rate increase in September still remained at 5.50%. This is able to constrain consumers in the country to overspend.
In addition, the inflation reading for the "Shelter Inflation" component (house rent price index, utility bills) is seen to continue to decrease and is able to provide a projection of the decrease in inflation in the country.
What is certain, the release of the CPI data report tonight is seen to provide a clear indication of the FED's further actions whether to maintain the existing interest rate (5.5%) or raise the interest rate by 0.25bps (5.75%) at the November 2023 FOMC meeting.
Gold vs Dollar
XAU/USD is seen to have experienced a surge in price since the announcement of the NFP data report last week.
Israel-Gaza geopolitical sentiment has given gold prices a boost this week. However, the focus of the gold market is now seen on tonight's CPI data report.
Therefore, gold is seen to be able to reach the $1,890 level and make a decline at least to the $1,860 price level. However, this scenario will be canceled if the $1,890 level is successfully broken all at once towards the $1,906 level.
