With energy and food prices in the US rocketing higher, it will come as little surprise that inflation figures for the month of October are expected to surge upon release on Thursday.

The Producer Price Index is anticipated to jump in October with the annualized rate predicted to hit a two-year high of 6.4 percent. US financial markets are more likely to respond to the Advance Retail Sales report, with surprises to the upside or downside likely to spark significant volatility, particularly in the equity markets and FX markets.

The carry-driven sentiment in the GBP/USD pair is a bit overpowering right now so traders should keep an eye on the status of the equity markets and other FX carry trades like GBP/JPY.

Fed fund futures are pricing in a 70 percent chance of yet another 25 basis point cut on December 11, but what about that pesky inflation issue? Won’t more accommodative monetary policy only fan price pressures?

Consumer and investor sentiment have turned more pessimistic, suggesting that the Euro-zone economy may be facing some road bumps. Furthermore, the financial markets have yet to fully recover, and as a result, the ECB is likely to take a firmer stance on inflation risks.

Speculation is mounting that the Reserve Bank of Australia will raise rates for the second time this year to an 11-year high of 6.75 percent, helping to drive the Australian dollar higher and leading the country’s government bonds lower.

The ISM non-manufacturing report is likely to be in line with the FOMC’s policy statement that cited major downside risks to growth were counterbalanced by upside inflation risks.

One of the most market-moving indicators out of the US will be released on Friday, but with the FOMC rate decision and policy statement leaving the forex, fixed income, and equity markets stumbling, the impact of the data could be skewed.