US CPI came in as expected on Wednesday, which has kept markets mostly confined to tighter consolidation. The data confirms expectations for another rate cut from the Fed next week. However, it also introduces the possibility that the Fed might be less accommodative in 2025.
Elsewhere, the Australian dollar has been benefiting from a strong wave of demand after sinking to a fresh yearly and multi-month low on Wednesday. Earlier today, Australian employment data came in much stronger than expected, leading to a less dovish repricing of RBA bets.
On Wednesday, the Bank of Canada proceeded with a 50 basis point rate cut. Interestingly, the Canadian dollar traded higher on the day, driven by the market’s prior anticipation of the rate cut—classic “buy the rumor, sell the fact” behavior.
Key standouts on Thursday’s calendar include the ECB policy decision, US producer prices, and US initial jobless claims.
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