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The Fed is up this week! What will Powell say and how will the dollar react?

CPI reports (December 11, 1:30 pm GMT)

  • U.S. consumer price index (CPI) shot up by 0.4% in October, faster than 0.3% expected and 0.0% growth in September. Core CPI came in at 0.2% as expected
  • Reaction was muted because Powell was set to testify a few hours later
  • Analysts see the headline CPI at 0.3% in November
  • Core CPI could maintain its 0.2% growth
  • Note that the FOMC statement will be published about 6 hours after the CPI release

FOMC statement and presser (December 11, 7:00 pm GMT)

  • Fed cut its rates as expected in October and hinted that there won’t be a hike anytime soon. This resulted in a risk-friendly mood where USD and other low-yielding currencies weakened
  • Latest FOMC minutes showed little hurry to change the Fed’s plans to “hold” its policies steady
  • No changes are expected from the Fed’s policies this week
  • Analysts will look at the Fed’s “dot plot” chart, economic projections, and Powell’s presser for hints a rate hike in 2020

Retail sales (December 13, 1:30 pm GMT)

  • Headline retail sales jumped by 0.3% in October after falling by the same rate in September
  • Core retail sales recovered by 0.2% after a 0.1% slip in September
  • The mixed results did not help USD as other U.S. data also came in weak
  • Market players see headline retail sales rising by 0.5% in November
  • Core retail sales could come in at 0.5% after a 0.2% gain in October

Technical snapshot

  • RSI, Williams %R, and Keltner Channel all signal that USD is “oversold” against GBP and NZD
  • Stochastic is extending the “oversold” status to GBP, CHF, and NZD

  • USD has been most volatile against NZD, GBP, AUD, CHF, and JPY in the last 30 days

Missed last week’s price action? Read USD’s price recap for December 2 – 6!