US inflation expectations rebound from six-week low

US inflation expectations rose for the first time in two weeks as traders reassess the previously put bets on the Federal Reserve’s (Fed) next move.

That said, the inflation precursors, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, rebound from the lower levels since October 06 to 2.34% and 2.31% in that order as per the latest prints published on late Monday.

The revival in the US inflation precursor justifies the US Dollar’s latest run-up even if the Fed policymakers flashed mixed signals in their latest appearances.

US Dollar Index (DXY) rose the most in November the previous day, ended Monday around 107.80, even if Atlanta Federal Reserve President Raphael Bostic and Cleveland Fed President Loretta Mester appeared less hawkish.

While firmer inflation expectations keep the USD bulls hopeful, this week’s preliminary readings of the monthly activity data and the Federal Open Market Committee (FOMC) Meeting Minutes will be crucial for clear directions.

Also read: EUR/USD eyes 1.0200 as risk aversion underpins the US Dollar