Analysts are looking forward to the US CPI data coming out on September 11, 2025. They expect the core CPI to rise above 3%. According to a Goldman Sachs report, tariffs are a key factor in these expectations. In recent news, Trump’s administration is proposing a 15-20% tariff on all EU goods, which has caused the EURUSD exchange rate to fall. Meanwhile, the People’s Bank of China has set the USD/CNY reference rate at 7.1034, and some speculate it could rise to 7.1157, according to Reuters.

Japan and South Korea Economic Data

In more economic news, Japan’s Producer Price Index for August increased by 2.7% year-on-year, hitting forecasts. South Korea also saw an uptick in both exports and imports in the first 10 days of the month. Foreign exchange trading carries high risks, including the chance of losing your entire investment. Prospective traders should assess their financial situation and get advice from independent financial experts. InvestingLive provides economic information for educational purposes but is not responsible for financial losses from using this information. They also receive payment based on user interactions with their advertisers. With the August CPI data due today, we are preparing for an inflation reading that could be higher than expected. Tariffs may be the main reason for this spike, with a major bank suggesting that the core reading could surpass 3%. This is happening as new minimum tariffs on all European goods are being considered, leading to increased market uncertainty. In this context, there’s a growing demand for options that can protect against market declines. The VIX index, which measures expected volatility, has risen from a summer low of 14 to over 18 in the last month, indicating increased investor nervousness as we await this inflation report. This suggests that investing in volatility through derivatives linked to major indexes could be a smart strategy in anticipation of a major market shift.

Impact on the Federal Reserve and Currency Markets

This situation puts the Federal Reserve in a challenging position, likely making them postpone any expected interest rate cuts. We saw something similar during the inflation shock in 2022 when markets underestimated the Fed’s commitment to controlling rising prices. A high CPI reading today would strengthen the idea of “higher for longer” interest rates, impacting anyone betting on a quick shift from the central bank. Strong US inflation will also affect currency markets and is expected to strengthen the dollar. This happens as other central banks, like the Reserve Bank of New Zealand, are anticipating rate cuts before the year ends. This growing difference in policies makes trades on currency pairs like the NZD/USD particularly appealing in the coming weeks. Traders should also think about strategies that focus on specific sectors considering the inflation and trade outlook. Protective puts on consumer discretionary stocks might provide a good hedge since higher import prices could limit consumer spending. Conversely, domestic industrial or materials companies facing less competition from Europe may perform better, making their call options an attractive option. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now