US inflation report in focus on Friday

By Peter Bukov|

Published: December 10 2021, 08:44 GMT+0

US inflation report in focus on Friday

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The greenback was trading slightly higher during the London session, heading into the most important economic number this week.

Earlier today, data showed that the UK third-quarter GDP rose marginally in October, climbing just 0.1% compared with the expected 0.4% gain, and is still 0.5% below its pre-pandemic peak. The Pound remained muted after the data, with the GBPUSD pair trading at one-year lows near 1.32.

Additionally, British manufacturing production halved to 1.3% year-on-year in October, down from 2.8% previously, while industrial production also dropped sharply to 1.4% from 2.9% in September. As a result, monthly changes also failed to meet estimates. 

Later in the day, ECB President Christine Lagarde will participate in a panel discussion at an online event hosted by the Bank for International Settlements. Her colleagues Panetta and Elderson will also have speeches, possibly impacting the EURUSD pair. 

However, the most focus today will be on the US CPI report for November; inflation is expected to rise again to 6.8% yearly, up from 6.2% in October. That would be the highest inflation number since 1982. Keep in mind that the Fed funds rate was around 15% back in those days. Today, it is at zero. 

The core inflation gauge is seen rising to 4.9%, up from 4.6% previously. 

Soaring inflation should put more pressure on the Fed to quicken its tapering pace and start raising rates as soon as possible.

In the markets, precious metals plunged yesterday, with silver dropping 2% below 22 USD for the first time since late September. Gold fell toward 1,770 USD. Volatility is expected to be elevated in precious metals after the CPI report. 

US equity indices declined slightly Thursday, with today’s inflation report possibly undermining stocks as well. The WTI benchmark