Consumer data tonight is explosive! Will the US dollar take off or plummet?
2026-01-14 16:30:34
On Wednesday (January 14), the US dollar index came under slight pressure after rebounding the previous day, fluctuating narrowly around 99.10 during the European session. On the surface, the latest US inflation data appeared "perfect": the Consumer Price Index (CPI) for December 2025 rose 0.3% month-on-month and 2.7% year-on-year, both in line with market expectations. More crucially, the core CPI (excluding food and energy) rose only 0.2% month-on-month, slightly below expectations; while the year-on-year figure remained at a low level of 2.6%.
Meanwhile, the resilience of the labor market continues to provide support. Previously released non-farm payroll data was strong, the unemployment rate fell, and the four-week moving average of ADP employment change also showed that hiring activity had not slowed significantly. This means that although inflation has eased slightly, the Federal Reserve still lacks sufficient reason to shift to easing. If the interest rate advantage can be maintained, the dollar will not easily collapse. Therefore, with inflation no longer causing surprises, market attention is rapidly shifting to the next key indicator: retail sales and the Producer Price Index (PPI).
Just as markets are attempting to interpret economic data, a series of unconventional risks are quietly altering the pricing logic of the US dollar. US federal prosecutors are reportedly threatening to investigate Federal Reserve Chairman Jerome Powell's statements to Congress regarding a building renovation project. While details remain unclear, the symbolic meaning is extremely sensitive—concerns are growing that central bank independence is being eroded.
Even more unsettling is President Trump's recent public pressure on the Federal Reserve to cut interest rates, and his threats to intervene forcefully in monetary policy. While such rhetoric lacks direct enforcement power, it is enough to raise concerns about "policy being politically hijacked" during a period of fragile market sentiment. Analysts point out that this uncertainty will affect the dollar in two ways: firstly, if traders perceive a more chaotic policy path, it may push up risk premiums in the short term, causing funds to flow into the dollar for safety; secondly, if long-term confidence is damaged, the dollar's status may be shaken, especially when risk appetite recovers, and selling pressure will accelerate.
The geopolitical situation is also not to be underestimated. Reports indicate that Trump's threat to intervene in the Iranian situation will undoubtedly escalate regional tensions, and if the conflict spills over, energy supplies and global shipping will face disruptions. Furthermore, Trump has made strong statements indicating his intention to "take back" Greenland and announced a new 25% tariff on all countries trading with Iran.
The key economic data to be released soon will ultimately determine the short-term fate of the US dollar. At 9:30 PM North American time, the US will release its November retail sales and Producer Price Index (PPI). The market widely predicts a 0.4% month-on-month increase in retail sales, reversing the zero growth in October. However, it should be noted that this data was delayed due to the government shutdown, compromising its timeliness, but this does not diminish its importance—retail sales are a core indicator of consumer spending, and consumption is the main engine of US economic growth.
Of particular note is the "control group" retail sales, which excludes automobiles, gasoline, building materials, and food services, and is considered to more accurately reflect daily consumer demand. Previously, this figure surged 0.8% month-on-month in October, far exceeding expectations and boosting market confidence in economic resilience. If it strengthens again this time, traders may revise their growth expectations upwards, thereby increasing their willingness to hold the dollar; conversely, if the data is weak across the board, it could trigger a "cooling demand" trade, potentially putting downward pressure on the dollar index.
Analysts emphasize that in the current environment, the most crucial factor is not whether the data "meets expectations," but rather the extent of the deviation. After all, inflation has already materialized, and there's no room for further surprises or shocks. Who will control the narrative going forward? The answer is likely retail sales. If the data is significantly stronger than expected, the dollar may surge in the short term, challenging the high of 100; if it is significantly weaker than expected, the support level of 98.7000 may be tested, and a break below this level would mean that the current rebound structure that started from the low of 97.7479 may be destroyed.
Technically, the US dollar index is currently in the middle of a daily-level rebound channel. The MACD indicator shows that the DIFF is 0.0778, the DEA is -0.0587, and the MACD histogram is positive and continuing to expand, indicating that bullish momentum is still accumulating. The RSI (14) is approximately 59.5772, which is in the strong range but has not entered the overbought zone, indicating that there is still room for upward movement, but a new catalyst is needed to drive a breakthrough. At present, the 99 level has become a psychological watershed, and whether it can be held will directly affect the judgment of subsequent trends.
In summary, the US dollar index is at a delicate balance: inflation returning to its expected trajectory has reduced the urgency for further tightening, but the robust job market limits the scope for premature interest rate cuts. Questions about policy independence and escalating geopolitical tensions make risk premiums a significant variable. And above all this, the real key to breaking the deadlock may lie in tonight's data release.
Currently, the market lacks a single driving force and is waiting for an "expectation gap" to break the deadlock. As long as retail sales and PPI do not deviate significantly, the US dollar will likely continue to fluctuate between 98.70 and 100. However, once the data releases a strong signal—whether it's a recovery in consumption or a contraction in demand—the market may quickly choose a direction in a short period.
Meanwhile, the resilience of the labor market continues to provide support. Previously released non-farm payroll data was strong, the unemployment rate fell, and the four-week moving average of ADP employment change also showed that hiring activity had not slowed significantly. This means that although inflation has eased slightly, the Federal Reserve still lacks sufficient reason to shift to easing. If the interest rate advantage can be maintained, the dollar will not easily collapse. Therefore, with inflation no longer causing surprises, market attention is rapidly shifting to the next key indicator: retail sales and the Producer Price Index (PPI).
Amidst a political storm, is the US dollar a safe haven or a carrier of risk?
Just as markets are attempting to interpret economic data, a series of unconventional risks are quietly altering the pricing logic of the US dollar. US federal prosecutors are reportedly threatening to investigate Federal Reserve Chairman Jerome Powell's statements to Congress regarding a building renovation project. While details remain unclear, the symbolic meaning is extremely sensitive—concerns are growing that central bank independence is being eroded.
Even more unsettling is President Trump's recent public pressure on the Federal Reserve to cut interest rates, and his threats to intervene forcefully in monetary policy. While such rhetoric lacks direct enforcement power, it is enough to raise concerns about "policy being politically hijacked" during a period of fragile market sentiment. Analysts point out that this uncertainty will affect the dollar in two ways: firstly, if traders perceive a more chaotic policy path, it may push up risk premiums in the short term, causing funds to flow into the dollar for safety; secondly, if long-term confidence is damaged, the dollar's status may be shaken, especially when risk appetite recovers, and selling pressure will accelerate.
The geopolitical situation is also not to be underestimated. Reports indicate that Trump's threat to intervene in the Iranian situation will undoubtedly escalate regional tensions, and if the conflict spills over, energy supplies and global shipping will face disruptions. Furthermore, Trump has made strong statements indicating his intention to "take back" Greenland and announced a new 25% tariff on all countries trading with Iran.
Tonight's data showdown: the fate of the 99 mark hangs in the balance.
The key economic data to be released soon will ultimately determine the short-term fate of the US dollar. At 9:30 PM North American time, the US will release its November retail sales and Producer Price Index (PPI). The market widely predicts a 0.4% month-on-month increase in retail sales, reversing the zero growth in October. However, it should be noted that this data was delayed due to the government shutdown, compromising its timeliness, but this does not diminish its importance—retail sales are a core indicator of consumer spending, and consumption is the main engine of US economic growth.
Of particular note is the "control group" retail sales, which excludes automobiles, gasoline, building materials, and food services, and is considered to more accurately reflect daily consumer demand. Previously, this figure surged 0.8% month-on-month in October, far exceeding expectations and boosting market confidence in economic resilience. If it strengthens again this time, traders may revise their growth expectations upwards, thereby increasing their willingness to hold the dollar; conversely, if the data is weak across the board, it could trigger a "cooling demand" trade, potentially putting downward pressure on the dollar index.
Analysts emphasize that in the current environment, the most crucial factor is not whether the data "meets expectations," but rather the extent of the deviation. After all, inflation has already materialized, and there's no room for further surprises or shocks. Who will control the narrative going forward? The answer is likely retail sales. If the data is significantly stronger than expected, the dollar may surge in the short term, challenging the high of 100; if it is significantly weaker than expected, the support level of 98.7000 may be tested, and a break below this level would mean that the current rebound structure that started from the low of 97.7479 may be destroyed.
Technically, the US dollar index is currently in the middle of a daily-level rebound channel. The MACD indicator shows that the DIFF is 0.0778, the DEA is -0.0587, and the MACD histogram is positive and continuing to expand, indicating that bullish momentum is still accumulating. The RSI (14) is approximately 59.5772, which is in the strong range but has not entered the overbought zone, indicating that there is still room for upward movement, but a new catalyst is needed to drive a breakthrough. At present, the 99 level has become a psychological watershed, and whether it can be held will directly affect the judgment of subsequent trends.
Volatility will remain the dominant theme; a breakthrough hinges on a "gap in expectations."
In summary, the US dollar index is at a delicate balance: inflation returning to its expected trajectory has reduced the urgency for further tightening, but the robust job market limits the scope for premature interest rate cuts. Questions about policy independence and escalating geopolitical tensions make risk premiums a significant variable. And above all this, the real key to breaking the deadlock may lie in tonight's data release.
Currently, the market lacks a single driving force and is waiting for an "expectation gap" to break the deadlock. As long as retail sales and PPI do not deviate significantly, the US dollar will likely continue to fluctuate between 98.70 and 100. However, once the data releases a strong signal—whether it's a recovery in consumption or a contraction in demand—the market may quickly choose a direction in a short period.
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