US Inflation Data in Focus as Markets Dial Back Rate Hike Expectations

The US dollar has been kept in line as expectations grow for the Federal Reserve to bring down their forecast of rate hikes for next year. Interests rates are expected to head higher, but a recent wrath of weaker economic data and dovish talk has brought expectations for the December 19th meeting from over 79% at the start of the month to 74.0% as of the close on Tuesday.
Current expectations for the Labor Department report is for headline CPI to fall to a flat reading from a prior 0.3% rise. The annual reading is also expected to fall 3/10 of a percentage point to 2.2%. Core inflation on a monthly basis is also expected to remain steady, while the year on year reading is to tick higher to 2.2%. The extended selloff with oil prices will weigh on headline price growth, but will most likely not be seen as a defining easing of price pressures.

  • Sir Graham Brady meets with PM May (could find out if he has the 48 letters for the leadership challenge)
  • US CPI readings and a 10-year bond auction
  • EIA crude oil inventories

Conservatives may have the 48 letters to trigger a leadership challenge
Cable got pounded after reports circulated that the threshold of 48 letters was reached and that confirmation should happen on Wednesday. The rebels need to submit 48 letters to Sir Graham Brady, the 1922 chairman, to trigger a vote of no confidence in Mrs May’s leadership.  Sterling extended its decline after news Sir Graham Brady asked to see the Prime Minister on Wednesday.  GBP/USD is trading at 1.2481, the lowest level since April 2017.

West Texas Intermediate graph Prime Minister May’s meeting with German Chancellor Merkel did not yield any concessions. Merkel reiterated that the EU would not reopen the deal.  The Prime Minister was also unsuccessful with various leaders on receiving any changes to the Brexit agreement or reassurances that the deal’s controversial backstop arrangement for Norther Ireland was temporary.

Oil rises on Libya’s shutdown and optimism that OPEC + production cut will stabilize prices
West Texas Intermediate rose 2.00 percent on Tuesday. WTI is trading at $52.01 after Libya’s largest oil field remains shutdown and optimism improved that the OPEC and allies production cut that was reached last week will stabilize the oil market. Price is also starting to show signs of a bottom with the $49.41 low made on November 29th. Despite initially giving up all the gains from production cut decision, oil prices continue to respect the $50.00 level. With the US poised to end 2018 as the top oil producer, many will pay close attention to EIA weekly oil inventories report. Last week, crude stockpiles fell by 7.3 million barrels, ending a 10-week streak of increases. Expectations are for stockpiles to fall by 3.0 million barrels.

West Texas Intermediate graph Bitcoin Mania No Longer Running Wild
Bitcoin fell 0.63 percent on Tuesday. The cryptocurrency bubble has popped and this latest crash has not shown any signs of slowing down. Over the past couple years, Bitcoin has experienced many crashes over hacking issues, the futures debut which allowed for short selling, but this recent dive is more on concerns it could become worthless.

West Texas Intermediate graph Market events to watch this week:
Wednesday, December 12
3:00am ZAR Consumer Price Index (CPI)
3:30am SEK Consumer Price Index (CPI)
08:30am USD Consumer Price Index (CPI)
Thursday, December 13
2:00am EUR Germany Consumer Price Index (CPI)
2:45am EUR France Consumer Price Index (CPI)
3:30am CHF Swiss National Bank (SNB) Interest Rate Decision
06:00 TRY Turkey Central Bank (CBRT) Interest Rate Decision
07:45am EUR European Central Bank (ECB) Interest Rate Decision
9:00pm CNY China Industrial Production
9:00pm CNY China Retail Sales
Friday, December 14
3:15am EUR France Preliminary PMI readings
3:30am EUR Germany Preliminary PMI readings
4:00am EUR Euro Zone Preliminary PMI readings
8:30am USD Retail Sales m/m
9:45am USD Preliminary Markit PMI Readings

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.