- US PPI came in softer than expected yesterday and follows a below consensus CPI report earlier this week. Headline PPI fell by 0.2% m/m, whilst the core was unchanged. Mixed data showed jobless claims saw a 13k gain this week raising concerns over the health of the labor market and whether layoffs are picking up. The US dollar remains well supported with EURUSD currently consolidating around this week’s low of 1.0720. A lack of economic data at the end of the week is likely to keep most pairs range bound.
- The Japanese yen weakened against the greenback and its G10 peers after the BoJ kept interest rates unchanged at its policy meeting. USDJPY rallied through 158 after the central bank said that it would reduce debt purchases but delayed providing details until its next policy meeting. The Japanese currency has been the weakest of the G10 nations this year falling more than 10% against the dollar, as the gap between Japanese and US interest rates remains wide weighing on the yen. With just one cut from the Fed currently pencilled in, that yield gap will likely remain wide keeping the JPY soft against the greenback and close to levels where officials recently intervened to support the currency.
- The pound is treading water and being driven by the US dollar as markets await key inflation data next week. After rallying to 1.2860 after the US inflation report, GBPUSD has slipped back to the bottom of its recent trading range to consolidate above 1.27. Traders will likely sit on the sidelines ahead of Wednesday’s CPI report and the BoE decision on Thursday.
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