Forex Today: US CPI inflation data and Fedspeak set to stir markets

The Trump trades-inspired broader market rally takes a breather early Wednesday as the focus shifts back toward the economic data, anticipating the all-important US Consumer Price Index (CPI) report slated for release in American trading.

The US Dollar (USD) pauses its ongoing upsurge alongside the US Treasury bond yields as traders book profits on their long USD positions in the lead-up to the US inflation showdown. The data is critical to gauging the Federal Reserve’s (Fed) easing trajectory.

Markets are pricing in about a 62% chance of another 25 basis points (bps) interest rate cut in for December, down from around 83% a month ago, according to the CME Group's FedWatch Tool.

US President-elect Trump’s hardline policies on trade and lower taxes are seen as inflationary, calling for higher interest rates while supporting the Greenback across its major rivals.

Additionally, lingering China’s economic concerns and pre-US CPI nervousness keep traders on the edge, leaving major currencies gyrating in a narrow range.