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US Consumer Price Index figures are set to show a pickup in inflation in December. CPI is a secondary statistic after Fed adoption of inflation averaging, as FXStreet’s Analyst Joseph Trevisani notes. Therefore, markets are taking the Fed’s cue and look away from this statistic.

Ahead of the release, the US dollar is on the back foot while gold gathers pace to test the $1872 hurdle.

Key quotes

“The Consumer Price Index (CPI) is forecast to rise 0.4% on the month and 1.3% annually up from 0.2% and 1.2% in November. The Core Consumer Price Index is projected to climb 0.1% and 1.6% in December after 0.2% and 1.6% in November.”

“The combination of weak price increases and the Fed’s new inflation averaging outlook has removed CPI, Core CPI and its Personal Consumption Price Index (PCE) counterparts from market consideration.”

“If the Fed can officially countenance inflation over its 2% target for a considerable period then no foreseeable monthly result will be of interest to markets.”