US CPI Preview

On the US calendar today, the US consumer inflation numbers for December are due at 13:30 GMT. The headline CPI is expected to rise by 0.4% from 0.2% in November and on an annual basis, it is expected to rise to 1.3% versus 1.2% previously. As for the core CPI (energy and food costs excluded), it is expected to rise 0.1% in December month over month, versus 0.2% prior and steady at 1.6% year on year.

Inflation in the US has been stable for five months since prices recovered from the lockdown collapse in April and May. Prices are expected to rise slightly in December.

The US dollar recovered from its lowest level in nearly 3 years on rising US Treasury yields, with hopes of President-elect Joe Biden pushing a stimulus package worth trillions of dollars, sparking a wave of selling in the bond market.

Demand for the EUR/USD pair has returned again near its lowest levels in several weeks. A stronger than expected reading is not expected to change the market rules, but it may provide some additional support for the dollar. However, if the reading is weak, it may boost expectations that the Fed will keep interest rates low for a longer period.