During the American session today, Thursday, January 12, the markets are looking forward to one of the most important economic figures in the week and in the month of January, represented by the Consumer Price Index (CPI), which is concerned with measuring inflation in the United States of America, where the importance of today’s numbers is reflected, given that it will largely determine the monetary policy of the US Federal Reserve in the coming period.

The markets are no longer as before watching the peak level of inflation, to what extent the rise will reach, but the focus has become to what extent inflation will decline and the speed of decline to form an idea about how far the Fed interest rates will reach, as we recall that inflation began to decline from peak levels of 9.1% in July of last year its highest level in 40 years, before reaching 7.1% in the last inflation reading in November.

It is estimated that the consumer price index may decline to 6.5% in December on an annual basis from 7.1% and that the core index excluding food and energy prices will decline to 5.7% from 6%, on a monthly basis. Inflation is expected to decline by 0.1% in December.

Inflation figures, if they decline, will support the US Federal Reserve’s decision to slow the pace of monetary tightening, as according to estimates of the futures markets from FedWatch issued by CME, the markets priced a 25 basis point hike in interest rates at the Bank’s meeting on November 1, by 75% and by about 68%, an increase of 25 basis points. In the March meeting, therefore, the numbers will support this hypothesis and become confirmed, at least for the month of February.

Since the beginning of the week, we have witnessed statements by a number of US Federal Reserve members, most of which came in their vision of interest rate levels higher than the 5% levels in the first half of this year, but with lower inflation numbers, or as expectations may change this view.

The US dollar is trading stable at 103.15 levels this Thursday morning, as any weak inflation numbers will translate into strong negativity for the US dollar, and other currencies, US stocks, and gold will rise.

Any sudden positive figures for inflation, even slightly higher than expectations, will cause the US dollar to rise strongly, and the stock and commodity markets will react negatively.