Comment: US recap: USD dips, risk rallies after PPI hints at lower Fed rate path

Noram Lithium

13/08/2024 21:54

(Repeat with no changes)
       Aug 13 (Reuters) - The USD index extended early NorAm
weakness, falling 0.33% to 102.76 in afternoon trading, after
the release of below forecast PPI data as both year-over-year
and month-over-month core data came in below forecast. 
    The cooler producer price data hints that Wednesday's
consumer price read (CPI) may confirm that U.S. disinflation
remains on track. The softer inflation data adds to odds for a
50bp Fed cut in September which is exerting additional pressure
on the dollar.
    Wednesday's headline U.S. CPI data is forecast steady at 3%
with core CPI expected to slip to 3.2% from 3.3% in June.
    EUR/USD rallied on the softer than forecast PPI data, rising
0.37% to 1.0972 ahead of the NorAm close. Euro traders are
awaiting German retail sales and euro zone employment for clues
to any shifts in ECB policy.
    USD/JPY reversed early gains, ending NorAm -0.47% at 146.76,
as the pair once again failed to hold gains near 148.00. Should
CPI on Wednesday ramp up more aggressive Fed rate cut
expectations, USD/JPY support by the Aug 9 low at 146.27, and
Aug 8 low by 145.43, may come quickly into focus.
    GBP/USD is holding near session highs in NorAm afternoon
trading, +0.66% at 1.2849, a smidge below Tuesday's NorAm high
at 1.2850. The pound is trekking higher after UK employment and
wage data hinted inflation reduction may be on a slower path
than recently expected. UK CPI Wednesday is in focus, as is U.S.
CPI, for clues on the evolution of UK and U.S inflation, and
UK-U.S. rate differentials which is currently the primary
determinant of GBP/USD movement.
    The lower PPI release put further downward pressure on U.S.
Treasury yields. The belly of the curve fell nearly 7 basis
points, while the longer-end fell 4-6 bps.
    Equities reacted positively to lower inflation and yields.
The Nasdaq rallied 2.3%, and the S&P 500 gained 1.4%, nearing
the NorAm close.
    Gold slipped a touch falling 0.17% to $2,466, but remains
close to its all-time-high at $2,483 put in on July 17. Bitcoin
rose 3.92% to $61.2k and ETH rose 1.1% to $2,709 as lower yields
supported cryptos.
     
    For more click on  FXBUZ   

(Editing by Terence Gabriel
Paul Spirgel is a Reuters market analyst. The views expressed
are his own.)
((paul.spirgel@thomsonreuters.com))