- US PPI M/M rises by 0.4% M/M in October
- Core reading also beats expectations in remaining at 0.4%
- Despite rise in inflation USD remains lower on the day
Recent months have seen a slightly concerning lack of inflation in the US as far as dollar bulls are concerned, with there being a notable pullback seen in both the CPI and PPI metrics. For the 4 PPI M/M releases from June until September there were 2 that missed consensus forecasts (August and September) one that was flat (0.0% in June) and one that actually showed a contraction (-0.1% in August). However, last month’s release saw a rise of 0.4% and this afternoon a second consecutive increase of 0.4% m/m looks to support the notion that inflationary pressures in the US are on the rise once more. Given a consensus forecast for today’s number of +0.1% the release is a clear positive surprise.
US PPI has risen strongly in the last two readings and could now be set to continue the uptrend seen for much of the last 3 years. Source: XTB Macrobond
As well as the headline PPI M/M beating projections, the core reading was also higher with a 0.4% increase M/M inline with the prior number and comfortable above the 0.2% expected.
The core US PPI has hit its highest level in several years and seemingly resumed its uptrend after the pullback over the summer. Source: Bloomberg
Despite the upbeat data the the US dollar is struggling to make a sustained gain so far and the market has been slipping a bit today with the currency trading lower against the majority of its crosses.
The USD is lower against the majority of its FX peers on the day despite the upbeat data Source: xStation
Another market that is sensitive to US data and has seen a cleaner reaction is Gold. The precious metal appears to be weak of late with a sizable decline on Friday and this morning on no real supportive news suggests that there has been some significant selling.
Gold has experienced several sizable decline in recent days that have been sharp in their size. Source: xStation
Longer term the market appears to remain in a downtrend with the 8 period EMA below the 21 on D1 and a break below the 1260 level could see the sell-off seen since the September high accelerate. Source: xStation