Morning bid: A twist in the U.S.'s inflation tale?

(Reuters) - A look at the day ahead in U.S. and global markets by Amanda Cooper.

The dollar is forging ahead again, heading for its biggest week-on-week gain since September last year, up 2.37% since last Thursday, while Wall Street looks set to open modestly higher thanks to what for now looks like win-win inflation numbers.

Wednesday's data showed consumer price pressures remain stubbornly above the Federal Reserve's target rate of 2%. And yet markets rushed to price in an 82% chance that the central bank will cut rates by another quarter point on Dec. 18, up from around 65% two days earlier.

They're also pricing in the possibility that inflation will accelerate under the incoming Trump administration as the president-elect has promised a cocktail of tax cuts, lower immigration and higher trade tariffs.

Granted, October's jobs report looked grim on the surface - with growth of just 20,000 - but the figure had been widely expected, given disruptions from two devastating hurricanes, plus a swathe of labor strikes.

At the same time, the dollar has surged to a one-year high against a basket of currencies on the 'best-of-both worlds' premise that U.S. growth will benefit from a looser fiscal regime, even as inflation rises.

Ordinarily, if the chances of a rate cut rise above 80% from nearer 60% just 24 hours earlier, the dollar would fall sharply. But investors are latching on more to the longer-term view that ultimately, King Dollar will rule supreme under Trump.

Investors and economists alike will be tweaking their models to factor all this into what it might mean for next month's nonfarm payrolls.

Another big below-forecast number might get some alarm bells ringing about the outlook for economic growth, while a big beat would theoretically see those hefty bets on a quarter-point cut in December get wound down, thereby giving the dollar another boost.

Today's weekly jobless claims will capture what happened in the week to Nov 7. Economists polled by Reuters expect first-time claims for jobless benefits to have risen by 223,000, from 221,000 in the week to Oct. 31, well below mid-October's 16-month high of 258,000. The Bureau of Labor Statistics conducts its survey for the monthly employment report in the week that contains the 12th of the month - the current week.

Continued claims are running around 1.89 million, near their highest since February, but still within the 1.5-1.9 million range that has prevailed for the last two years.

Fed Chair Jerome Powell addresses an event in Dallas later on, when he is due to discuss the economic outlook. Initial weekly jobless claims - unless they're eye-popping in either direction - are unlikely to feature, but Powell's take on the market's assessment of the chances of a December cut, as well as October's weak nonfarm payrolls, will.