Calm day with US core PPI
Across the board, this week’s data has been strong but not so important. The market has instead been focused on central banks, with both the US Federal Reserve and the Bank of England meeting last week. The FOMC voted to taper immediately in November, with a $15bn reduction per month in purchases, which implies asset purchases would end completely by June 2022.
Markets are continuing to price in a Fed lift-off that occurs sooner than the Fed desires. Even though many Federal Reserve officials have gone to great lengths to emphasize that tapering does not imply raising rates immediately, Bullard is certainly not one of them.
The dollar index is retreating for the third consecutive day around 93.82 with dollar/yen continuing the selling interest below the 113.00 round number after the release of US PPI. For October, core producer prices for final demand climbed by 0.4%, accelerating from 0.2% in September but falling short of market forecasts of 0.5%. In yearly terms, the producer price index remained the same as before at 8.6%.
The euro continues to struggle to reclaim the $1.16 region. The pound has taken a beating following the BoE, but has found some footing in recent sessions, with cable rising from a low of $1.3410 on Friday. While some of this is due to a weaker dollar, the pound itself has also found a more stable footing, with euro/pound failing to overcome the 200-day simple moving average (SMA).
Stocks
The S&P 500 and the Dow Jones futures are marginally down after the rise to record highs in the previous days, with investors awaiting fresh U.S. inflation data for clues on the direction of interest rates. European stocks were trading near all-time highs, buoyed by robust corporate earnings reports that boosted investor confidence.
Commodities and commodity currencies
In other markets, WTI crude oil futures are continuing to hold above $82.00/per barrel and gold is hovering beyond the $1,825/per ounce today. The aussie and kiwi are slightly softer versus the greenback, while dollar/loonie is flattening around 1.2440, finding strong resistance at the 200-day SMA.
