Market focus is on the US inflation report published in the New York session yesterday which triggered significant movements on price charts, especially involving the US dollar currency pair.
Examining the published report, the consumer price index (CPI) showed an increase to 3.0% for January 2025, missing the forecast to remain at 2.9% as before.
This shows an increase in inflation for the 4th consecutive month from the 2.4% level recorded in September last year.
The monthly and core CPI readings also showed an increase compared to forecasts.
From this new indicator, the market expects difficulty for the Federal Reserve (Fed) to continue cutting interest rates, instead high expectations for interest rates continue to be maintained with a percentage of up to 97% on the CME FedWatch indicator.
The US dollar strengthened significantly as soon as the data was published, but it surprised investors when the king of currencies was seen weakening again as it headed towards the end of the session.
Market analysts assessed the US dollar's depreciation reaction as likely temporary with the currency expected to gain some advantage after the latest NFP and CPI employment data.
Investors will remain cautiously watching the US dollar's movements ahead of the release of US producer inflation (PPI) data in the New York session tonight before following up on US retail sales data on Friday.
In addition to indications for central bank monetary policy, the market will also be following developments on President Trump's policies that could influence the current market sentiment.
Announcing to announce reciprocal tariffs on all countries that impose tariffs on US imported goods, Trump also plans to raise steel and aluminum tariffs by 25% which will take effect in early March.
