Volatility Alert》US CPI Heavyweight Approaches

Can it pave the way for the Federal Reserve to cut interest rates in December?

The US November CPI report will be released tonight, showing that the US November CPI has increased by 2.7% year-on-year, meeting expectations while rising 0.1% from October, marking the second consecutive month of increase and reaching a nearly 4-month high; the November CPI has increased by 0.3% month-on-month, also in line with expectations and up 0.1% from the previous value.

Probability of a rate cut rises to 97.7%

According to CME's FedWatch tool, following the release of the CPI report, the market's forecast probability for the Federal Reserve to cut interest rates by 25 basis points in December has risen to 97.7%, while the probability of opting to pause rate cuts has fallen to just 2.3%.

Next week's focus on US and Japan central bank dynamics

Additionally, next week is Super Central Bank Week, with major central banks including the US, UK, and Japan holding intensive decision-making meetings, with the decisions from the US Federal Reserve and Japan being the most closely watched.

Currently, the US benchmark interest rate is 4.75%, Japan is at 0.25%, and the UK is also at 4.75%. If the US cuts rates and Japan decides to raise rates the next day, it could trigger fluctuations in the international market, reminiscent of the yen carry trade unwinding wave in August, so users are advised to be cautious of risks.