26/07/2024
Written by: Ian Morley
Summary:
The recent producer price inflation figures surpassed expectations in January, indicating a 0.3% increase compared to December’s -0.1% and an anticipated 0.1%. This led to an initial rise in the USD, mirroring the response to last week’s consumer price index data, though the currency couldn’t sustain the gains.
Market Insight:
The start of the week is expected to be quiet due to Presidents’ Day closure in the US, with the USD showing slight weakness following last week’s performance. Focus shifts to key events such as the ECB survey on negotiated wage rates, Fed policy meeting minutes, and the release of flash PMI numbers from various regions on Thursday. Additionally, final inflation figures from Europe are due on the same day.
Despite the increase in US inflation figures, the USD’s failure to capitalise suggests potential consolidation of its gains this year. Consequently, GBPUSD and EURUSD may see upward movement ahead of the Fed minutes and PMI numbers.
Analysis:
Given the USD’s inability to capitalise on the inflation uptick last week, it appears poised for a correction in its 2024 uptrend. With limited data this week, the currency may rely on hawkish Fed rhetoric for support.