US CPI report for November is a key macro release of the day (1:30 pm GMT). Significance of the data increases as it will be released just a day ahead of the final FOMC rate decision of the year. A point to note ahead of the release is that US PPI inflation data for November was already released last Friday and it showed an upside surprise with headline PPI inflation decelerating from 8.2 to 7.4% YoY (exp. 7.2% YoY). This boosts odds for a positive surprise in CPI data as well. Economists expect headline CPI inflation to decelerate from 7.7 to 7.3% YoY and core growth to slow from 6.3 to 6.1% YoY. While a 50 bp rate hike looks like a done deal for tomorrow's FOMC decision, a significant surprise in CPI data may make Fed reconsider its future outlook.
A lower-than-expected CPI reading would boost market hopes for a more dovish Fed going ahead and it could be negative for USD while being positive on US indices and precious metals. Taking a look at GOLD at D1 interval, we can see that price has been struggling in the vicinity of the 200-session moving average recently. A double top was painted in the resistance zone ranging between $1,800 handle and 50% retracement. Two levels to watch in case pullback deepens are $1,765 (neckline of DT pattern) and $1,750 (lower limit of the Overbalance structure). On the other hand, should bulls regain control, the attention will once again shift to the aforementioned $1,800 resistance.
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Source: xStation5
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