US CPI came in hot, and the market is pricing just one rate cut in 2025. Yet, the US dollar was unable to hold on to the post-data rally. The market is happy to see things play out this way, with a sense that the extent of dollar bullishness from US tariffs and the trajectory of inflation could already be well priced in, leaving the balance of risk leaning back the other way.
It feels like the market hasn’t spent as much time pricing in the possibility that Trump’s tariff talk is more of a tactic than anything else. Even if the president is serious about following through, countermeasures against the US could also need more pricing in.
The takeaway here is that the dollar may not have much more room to run, especially with longer-term technical studies showing signs of a possible dollar top in the works.
Key standouts on Thursday’s calendar include German inflation data, UK GDP, trade, industrial production, construction orders, ECB speeches, the ECB economic bulletin, Eurozone industrial production, US producer prices, and initial jobless claims.
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