Global financial markets are closely watching the release of the US Consumer Price Index (CPI) for June, a key report that could determine the direction of the US Dollar and influence the Federal Reserve’s next moves on interest rates. The data is scheduled for release on Tuesday at 12:30 GMT and is expected to show an annual inflation rate of 2.7%, up from 2.4% in May.
Rising Inflation and Trump’s Tariff Threats Cast a Shadow
As US President Donald Trump continues to threaten new tariffs on imports from Europe and Mexico, investors are looking for signs of whether these measures have started to filter into consumer prices.
Analysts expect the Core CPI, which excludes volatile food and energy prices, to increase 3% year-over-year, compared to the 2.8% gain reported last month. On a monthly basis, both headline CPI and Core CPI are forecast to rise by 0.3% in June.
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How Could Markets React to the Inflation Data?
Stronger-than-expected inflation figures could reduce expectations for interest rate cuts by the Federal Reserve, potentially driving the US Dollar higher. This scenario would likely pressure major USD pairs such as EUR/USD lower.
Conversely, if inflation data comes in softer than forecast, concerns about tariff-driven price increases may ease. This would strengthen market expectations for rate cuts, weighing on the Dollar and supporting risk assets.
Conclusion
This week’s US inflation report is critical for traders and investors as it provides fresh insights into price pressures and the Federal Reserve’s potential policy response. Any upside or downside surprise in CPI data could trigger significant volatility in currency and equity markets.
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