The US Dollar (USD) is mixed near this week’s high ahead of the key Consumer Price Index (CPI) data for September, which will be published on Friday, BBH FX analysts report.

Fed pivot expectations cap US Dollar gains

"USD will likely continue to trade within a tight range ahead of tomorrow’s release of the US September CPI and October PMI prints. The Cleveland Fed’s Nowcast model forecasts headline CPI to rise to 3.0% y/y (consensus: 3.1%) vs. 2.9% in August and core CPI to dip to 3.0% y/y (consensus: 3.1%) vs. 3.1% in August."

"Progress towards the Fed’s 2% inflation goal is stalling, but upside risks to prices are not martializing. Headline CPI inflation has yet to reflect the rise seen in the ISM prices paid indexes, which may now be topping out. More importantly, wage growth is running around sustainable rates consistent with the Fed’s 2% inflation goal given annual non-farm productivity growth of around 2%.

"Our base case is for the Fed to pivot more dovish by year-end, which will weigh on the USD and further fuel the rally in equity markets."

(This story was corrected on October 23 at 10:13 GMT to remove some references not related to the US Dollar.)