US inflation data conclusions tend to be mixed, while traders prefer to wait-and-see ahead of the Fed's FOMC meeting tomorrow.

Tonight's (12/Dec) US inflation data was mostly in line with consensus estimates, leaving Fed rate speculation unaffected. The US Dollar Index (DXY) continued to circulate within the 103.50-104.00 range after the inflation release, while the greenback displayed mixed performance in major pairs.

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US inflation data recorded an increase of 0.1% in November 2023, slightly higher than the consensus estimate of 0.0%. Meanwhile, annual inflation eased from 3.2% to 3.1% as expected.

Core inflation grew 0.3% monthly and 4.0% on an annualized basis. Both were also in line with the forecast.

Only the super-core inflation parameter posted a rise in this period, at 0.44% in November compared to 0.22% in October. The super-core data measures the increase in prices of various service costs excluding energy and housing.

"Once we dig into the data, we can see that some of the underlying numbers may be a little bit stiff, particularly the super-core numbers," said Shaun Osborne, chief forex strategist at Scotiabank, as reported by Reuters.

The forex market barely reacted following the release of the US inflation data series. The conclusions from the data were mixed, while traders preferred to wait and see ahead of the Fed's FOMC meeting tomorrow.

The market focus is centered on one question: When will the Fed start cutting interest rates? Most experts think that the Fed will still maintain its current interest rate level and policy position.

Christoph Balz, senior economist at Commerzbank, said that US inflationary pressures are indeed declining. However, the decline is gradual. He argues, "Taking this trend into account, it is unlikely that the Federal Reserve will raise interest rates again. However, a rate cut is also not realistic until mid-2024."

Claire Fan, an economist at RBC, also thinks Jerome Powell will again dismiss speculation around interest rate cuts. She expects the Fed funds rate to remain at its current level until the second quarter of next year.