The US dollar made gains after the release of US PPI data, boosting the DXY index above 107.00. Headline PPI accelerated to 3%, faster than estimates and the prior release of 2.6%. Core PPI rose by 3.4%, faster than 3.2% estimates and 3.1% prior.
Jobless claims came in higher at 242K compared to 220K expected and 225K prior.
After this week’s data, markets have heavily priced in a 25bps cut at next Wednesday’s FOMC meeting at 95.9%, reducing the rate to 4.25-4.5%.
The ECB followed market expectations and trimmed interest rates by 25 bps to 3.00%. This led to a clear break in the 1.0500 level for the single currency, ending the pair currently trading at 1.0460.
The ECB Monetary policy statement had policymakers remove the word “restrictive” when discussing monetary policy, and noted that “most measures of underlying inflation suggest that it will settle at around 2% target on a sustained basis.”
Cable depreciated for a third consecutive day, breaching the 1.2700 level and currently trading at 1.2660 as US PPI data rose faster than expected and supported the US dollar.
Depreciation was further caused by potential tariff threats from Trump’s administration that boosted the US dollar against all major peers and created a headwind for the risk-sensitive pound.
UK data today will include monthly GDP and October’s factory data.
