US Dollar Index (DXY) consolidates around 99.00 with all eyes on the US CPI

• The US Dollar consolidates gains within a narrow range around 99.00.
• Investors await the release of the US CPI, due later today, to make investment decisions.
• Later on, preliminary US PMI data is expected to show healthy business activity.

The US Dollar is consolidating previous gains on Friday, trading within a 40-pip range, both sides of the 99.00 line, with investors looking from the sidelines ahead of the release of September’s US Consumer Prices Index report, due later on the day.

The US Bureau of Labour will make an exception and release September’s inflation figures, despite the ongoing US government shutdown, to provide the Social Security Administration with the necessary data to calculate the annual cost-of-living adjustment in order to manage benefits and subsidies.

US CPI is expected to show higher price pressures

The market consensus anticipates a further acceleration of price pressures, with the yearly CPI rising to 3.1% from 2.8% in August. However, the core CPI, more relevant for the Federal Reserve’s rate-setting purposes, is expected to have continued growing at a 3.1% yearly rate, unchanged from the previous month.

The primary focus remains on next week’s Fed meeting, which is widely expected to conclude with a 25-basis-point rate cut, no matter the outcome of today’s CPI release. An upside surprise in inflation, however, might revive fears of tariffs-induced inflation risks, cast doubt on a December rate cut, and provide an additional impulse to the US Dollar.

Apart from that, investors will also be attentive to the preliminary US S&P Global Purchasing Managers’ Index (PMI) data for further clues about the strength of the US economy. The market consensus points to a steady growth in the manufacturing sector and a moderate slowdown in services, all in all, reflecting a healthy business activity.