.png)
PPI Jumps Again, CPI Up Next
The US Dollar has come under fresh selling pressure on Wednesday, despite hotter-than-forecast PPI data yesterday and hawkish comments from Fed chairman Powell. April PPI was seen topping forecasts at 0.5% on both core and headline readings, up from -0.1% prior in both readings, above forecasts for 0.2% and 0.3% respectively. The key now will be in seeing whether producers passed these rising costs onto producers in today’s CPI release. The annualised figure is expected to cool slightly to 3.4% from 3.5% prior. However, on the back of yesterday’s figures, there are clear upside risks for today’s data.
Powell Warns Restrictive Rates Needed for Longer
Speaking yesterday, Fed chairman Powell admitted that inflation was taking longer to return to target than many in the Fed expected. With inflation still elevated, the Fed chief warned that rates would need to stay at current restrictive levels for longer in order to ensure inflation travels back to target. Powell downplayed speculation that the Fed might even need to hike again but warned that the bank will need to be patient with rates at current levels.
Dovish Bias Remains
Commenting on the PPI data, Powell referred to the report as mixed, highlighting some components of the data which had eased, including downward prior revisions. Powell comments were seen as further evidence of the dovish bias within the Fed, partly explaining the decline we’ve seen in DXY on the back of the data. All eyes will now be on CPI today. Any undershooting of forecasts will clearly feed into a sharply lower Dollar while any upside surprises will be more difficult for markets to digest.
Technical Views
DXY
The index is once again testing support at the 104.95 level. With momentum studies bearish, focus is on a continuation lower and a test of the bull channel lows next, which bulls will need to defend to prevent a test of deeper support at the 103.48 level thereafter.
-1715762288.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.