FX: US PPI Breakdown

  • US PPI 0.1% vs 0.2% prev 0.0%
  • US-China to sign "phase one" trade deal
  • US Tsy Sec Mnuchin says tariffs may be rolled back in "phase two"

This is the price index from companies that produce things in the US for the month of December. Last time out the reading came in above the expected result of 0.3% to print at 0.4%. In December the DXY had been pretty choppy trading in a range between 96.36 and 98.38. At the beginning of the December the price of the dollar fell pretty rapidly but on the 31st the price reached a low of 96.36 for the second time in the month. The weakness in the USD is likely to have affected the reading.

Today’s data is unlikely to sway the Fed in anyway as they are still firmly on a "wait and see" stance at the moment. The next move in rates is probably lower according to most analysts so any weakness in inflation metrics would be welcome.

EUR/USD reaction
Heading into the data release EUR/USD was trading at 1.1140 around 0.13% higher on the day. The main theme of the session will be the US-China “phase one” signing. US Treasury Secretary Mnuchin has said today they expect tariffs to be rolled back in “phase 2” but he also stated that phase 2 could be split into many parts. EUR/USD rose marginally after the data but the level for bulls to target is the intraday wave high of 1.1155.