A1 Trading Company

November 13, 2023

CPI Expectations Lower in November

Frank Cabibi

Economists are expecting lower numbers on inflation data tomorrow in the US. After seeing higher NFP and slower wage growth, this will be a key metric in figuring out whether or not the Fed will decide to hike rates or keep them the same.

EdgeFinder Analysis

EURUSD is no longer a strong bearish reading on the EdgeFinder scanner. Retail is still mixed for the time being, and COT data is late to report the most recent activity from smart money.

Some things to watch closely will be the trend reading, COT, and CPI data (inflation) that will update this week this Tuesday. If we see a lower Core CPI and CPI y/y, the EdgeFinder will change its score to a stronger bullish reading on the pair.

NAS100 is now a +5 on the scanner which is a bullish reading. The index saw an incredible run last week as price broke above resistance on the 1D timeframe and is now hovering just above support.

Similar to EURUSD, if the CPIs come in lower, we can expect the market to react in a bullish manner as it is in compliance with the Fed's goal to reach their target inflation on 2%.

Although gold tends to perform better in high inflationary markets, the metal also finds demand from a weaker dollar. Lower inflation will ultimately weaken USD bullishness as investors will look to rick-on pairs as well.

Gold is no longer a strong bullish score on the EdgeFinder. In fact, it is now moving towards the bearish camp due to a stronger US economy, lower bond yields and the recent trend lower. Overall, this asset is mixed, but CPI will be a huge mover on the score and the price of gold.

Retail Spotlight

Retail is now heavily bullish on oil, AUDUSD, USDCHF and UK100. EU and gold are mixed, however. And the US indices are largely shorted by the crowd.

Smart Money Spotlight

Due to the CFTC's delay in reporting smart money data, we currently have no new updates from the COT side. The EdgeFinder will closely monitor the committee's outlook once they send out their latest report.

Fundamental Spotlight

The SPX500, NAS100 and US30 all share the same inflation score and are impacted in the same fashion. Right now, the score is -1 or bearish for the stock market. However, tomorrow's CPI could change the score to bullish if economists are correct in their expectations of a lower inflation rate.

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