US PPI In Focus
The final tier-one data release this week will be the US August PPI number due later today. The US Dollar has been broadly recovering this week since the August jobs number came in well below expectations last week. The market is judging that Fed tapering is still likely to come this year, in line with the broader economic trajectory and the comments made by several Fed members recently. As such, the weakness on the back of last week’s data has attracted plenty of demand. Today’s data has the potential to further fuel the rally if we see a strong release.
The market is looking for headline PPI to tick down to 0.6% from the prior month’s 1% reading, while core PPI is forecast to fall to 0.5% from the prior month’s 1% reading. With such a low bar set, there is plenty of room for an upside surprise which would likely see USD well bed into next week.
Where to Trade US PPI?
USDJPY
The consolidation in USDJPY, framed by the contracting triangle pattern, has continued across September so far with indicators having flattened, reflecting the loss of momentum. However, there is still plenty of scope for the current price action to resolve to the upside, in line with the longer term bull trend and today’s data might prove to be the catalyst. To the topside, bulls will need to see a break of 110.92 to encourage fresh momentum targeting 111.70 next.
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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.