Today sees one of the key event risks of the week – the annual US CPI benchmarks revisions. Economists at ING analyze how the annual update of seasonal adjustment (SA) factors for consumer price inflation could impact the US Dollar (USD).

Was the late 2023 disinflation trend real?

Either an upward revision will prompt a modest back-up in short-term US rates and prove Dollar-supportive. Or no material revisions can provide the Fed with confidence that last year’s disinflation trend was a true one – bolstering the soft-landing scenario and softening the Dollar.

Given the market’s conviction call for lower rates this year, risks to the Dollar might be greater to the downside today. And this move could be backed up by contained January CPI readings next week, where we see headline at 0.2% MoM and core at 0.3%.