PPI exceeds consensus, dollar firms, equities soften
US PPI data for July released this morning was higher than expected by a fairly wide margin, causing a short-lived pop in the US dollar, a drop in equities and higher US T-bond yields. PPI MoM of 1.0%, matched June’s figure but exceeded expectations of 0.6%. Traders await today’s $27 billion 30-year auction, but after yesterday’s moderate CPI data which fueled a strong 10-year sale, bond yields may actually soften ahead of the 1pm EST auction. Equities are currently flat and UST 10Yr yields firmer by 2 bps to 1.37%. Gold and oil are slightly lower at $1,747 per oz. and $69.17 per barrel, respectively. Tomorrow, Import Prices and University of Michigan Sentiment data are released.
August 12, 2021
EUR/USD 1.1731 GBP/USD 1.3837 USD/CAD 1.2506 AUD/USD 0.7341 USD/JPY 110.46 USD/CNH 6.4800 USD/ILS 3.2198 USD/MXN 19.8912 USD/CHF 0.9230 USD/INR 74.24 USD/BRL 5.2280 USD/SGD 1.3579 USD/DKK 6.3395 USD/SEK 8.6905 USD/NOK 8.8550
The dollar jumped on the back of higher than expected PPI data, but quickly reversed and settled near yesterday’s close. The dollar currently is mixed across the board, firm against the BRL, NZD and AUD and soft versus the INR and MXN. Another inflation data point will be released tomorrow – Import Prices – which are expected to be relatively high at 0.6% MoM, but lower than the prior month’s 1.0%.GBP
The British pound is slightly lower following a slew of economic data releases for the UK. While preliminary GDP Q2 of 4.8% QoQ and 22.2% YoY met expectations, Government Spending soared, and Business Investment significantly underperformed, as did Industrial Production. UK’s Trade Balance fell to its worst deficit since December.EUR
The euro is barely changed despite a weakening Industrial Production (IP) report for June. Analysts were disappointed that that IP has not rebounded from the pandemic, leading many to doubt that an economic recovery is nigh. The Eurozone’s Trade Balance for June will be released tomorrow.CAD
The Canadian dollar is lower on the back of a broadly firm US dollar and lower commodity/oil prices. There are no economic data releases for Canada today.ASIA/PACIFIC
The Japanese yen and Chinese yuan moved little overnight, with no economic releases today in either country.
The NZD and AUD are both lower - the two worst performing G-10 currencies -as commodity prices soften. Australian capital Canberra went into a one-week lockdown after reporting its first Covid case in more than 12 months.
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