USD Dips After Softer Producer Inflation PPI Numbers

Markets were more cautious today as markets await the FED policy decision later in the evening before committing to any positions this week. The USD was stable earlier but is seeing some weakness now as traders position themselves before the FOMC. Everyone is expecting the FED to remain on hold today, but traders are uncertain about the future of the monetary policy, and whether the FED will start cutting rates now that the 2-year inflation period is over.

USD/JPY was trading around 145.60-80 earlier, but has dived lower toward 145 a the USD retreats, while EUR/USD has climbed above the 1.08 mark amid some huge option expiries on the day, at 1.0790. But it is finding resistance at the 100 SMA, where we decided to open a sell EUR/USD signal just now.

The pound was the most volatile and the weakest currency today, with GBP/USD falling from 1.2550 to 1.2510 following lower UK monthly GDP statistics for October which were released this morning. In the US session, we had the US PPI (Producer Price Index) report, which came on the soft side, with core CPI falling flat at 0.0%, which helped push the USD lower and GBP/USD higher.

US November Producer Price Index Report

• November PPI 0.9% YoY vs 1.0% expected
• October PPI YoY was +1.3%

• PPI final demand YoY 0.9% versus 1.0% expected
• PPI final demand MoM 0.0% versus +0.1% expected
• PPI ex food and energy YoY 2.0% versus 2.2% expected. Prior month 2.4%
• PPI ex food and energy MoM 0.0% versus 0.2% expected. Prior month 0.0%
• PPI Ex food and energy/trade 2.5% versus 2.8% last month (revised from 2.9%)
• PPI Ex food and energy/trade 0.1% versus 0.1% last month

There was some US dollar selling in response to this, but it was shortly reversed. While all eyes are on the FOMC today, these figures illustrate the easing of inflationary pressures in the pipeline. Furthermore, with oil and natural gas prices plummeting, expect a significant reduction in December.

EUR/USD Live Chart