How Are Markets Responding After U.S. Inflation Data?

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How Are Markets Responding After U.S. Inflation Data?

According to data released by the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) for November increased by 2.7% year-on-year. On a monthly basis, consumer prices rose by 0.2%, aligning with the increase recorded in October and economists' expectations. Core inflation, excluding food and energy, rose by 0.3% since October, maintaining an annual rate of 3.3%.

This inflation data was the last critical indicator before the Federal Reserve's meeting on December 17-18 regarding interest rates. CME Group's FedWatch tool indicates an 86% probability of a quarter-point rate cut. Additionally, the 227,000 new jobs reported in the November employment report further boosted expectations for monetary policy easing.

How did the markets initially react? Despite a significant decline in inflation from its peak of about 9% in June 2022, prices continue to remain steadily above the Fed's targets. While the data supported confidence that the Fed might lower interest rates, the DXY index turned downward following the announcement. The Dollar Index, which had risen to 106.80 during the day, reversed its daily gains and retreated towards the 106.3 level after the CPI release.

EUR/USD also turned upward with a similar momentum, recovering its daily losses and rising to 1.0537. After jumping towards the 152.60 area, USD/JPY eased back down to the 152 level.

Gold, which has been rising since the beginning of the week, briefly dipped to $2,675 in the early hours of the day but quickly recovered, continuing its rise and finding buyers above $2,700. Bitcoin, after experiencing negative closes in the first two days of the week, is moving positively today. Showing buying momentum throughout the day, Bitcoin continued towards the $98,800 range after the inflation data release.

U.S. stock markets are preparing for a positive open. Ahead of the market opening in the U.S., futures indices are showing a very positive momentum. European stock markets are also generally maintaining a positive trend.

In the domestic market, the BIST 100 is moving sideways today, while the dollar/TL is holding steady at 34.86. The euro/TL is also moving sideways around the 36.71 level. Gram gold is close to the 3,030 TL level, maintaining its gains throughout the day.