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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

US inflation data takes centre stage as markets digest strong jobs report​

Economists anticipate a drop in headline inflation, but core rates may remain steady as the Federal Reserve weighs its next moves.

USD trading Source: Adobe images

​​​US inflation report gains prominence after surprising jobs data

​The latest US inflation figures will be the focal point for markets this week as traders and policymakers attempt to gauge the strength of the world's largest economy. This comes on the heels of a surprisingly robust jobs report that has shifted expectations for Federal Reserve (Fed) policy.

​Economists predict a dip in headline inflation

​Analysts expect the headline inflation rate to fall to 2.3 per cent from 2.5 per cent, which would place inflation at its lowest level since February 2021. However, core inflation, which excludes volatile food and energy prices, is anticipated to hold steady at 3.2 per cent. This stability in core inflation is largely attributed to a rebound in used car prices.

​Strong jobs report reshapes expectations

​The inflation data takes on added significance following Friday's jobs report, which surpassed all expectations. The US economy added 254,000 jobs in September, significantly outpacing the 150,000 forecast by economists and marking a substantial acceleration from the previous month's figure of 159,000.

​Additionally, the unemployment rate posted a surprise drop to 4.1%, down from 4.2%, while wage growth also exceeded expectations. These strong labour market indicators have prompted a reassessment of the Fed's likely path forward.

​Federal Reserve's next moves under scrutiny

​Fed officials had previously cited concerns about the labour market as a key reason for their 50-basis point interest rate cut in September. The strength of the recent data suggests the Fed may revert to smaller 25-basis point cuts in the months ahead.

​Minutes from September's meeting, set to be released on Wednesday, will provide further insight into last month's decision. With only one rate-setter opposing the move, investors will be keen to discern whether the rate-setting body was more divided than the vote split implied.

​Bank earnings season kicks off amid changing rate environment

​As the week progresses, some of the largest US banks – including JPMorgan and Wells Fargo – will deliver their third quarter (Q3) results on Friday, signalling the start of earnings season. The crucial question for investors will be how bank profits hold up in the face of a potential rate-cutting cycle.

​Market implications and looking ahead

​The combination of inflation data, Fed minutes, and bank earnings will provide markets with a wealth of information to digest this week. Investors will be closely watching for signs of economic resilience or weakness, as well as any hints about the future direction of monetary policy.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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