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PPI Drives USD Higher
The US Dollar has rebounded into the end of the week following some stronger-than-forecast data yesterday. On the back of hot consumer inflation earlier in the week, PPI yesterday came in above consensus at 0.3% vs 0.2% on core and 0.6% vs 0.3% on headline. Retail sales were a touch below expectations at 0.3% vs 0.5% expected, but still up from the prior month’s negative reading, while unemployment claims were also seen dipping to 209k vs 218k expected and 210k prior.
Bullish USD View
In all it was a pretty solid showing which has helped strengthen the view that the Fed is likely to continue to push back against near-term rate-cut calls when it meets later this month. With the headline NFP coming in well above forecasts and CPI remaining strong last month, there is little currently to warrant a change in outlook from the Fed, meaning that USD is likely to stay supported unless we come across some weaker data near-term.
More US Data Due
Looking ahead today, we have two further releases due with Empire state manufacturing and prelim UoM consumer sentiment and inflation expectations data. Unless we see any stark downside surprises today, these readings are unlikely to derail the USD recovery ahead of the weekend, priming the greenback for a better start next week. As a result we’re seeing widespread corrective action today across risk markets with crypto, stocks and commodities all retreating.
Technical Views
DXY
The rebound off the 102.49 level has seen DXY trading back up to retest the 103.48 level. Bulls need to see a break higher here to put focus on a fresh challenge of the bear channel highs and the 104.95 level above. While the bear channel holds, however, risks of a further downturn can still be seen.
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