US producer prices rise
Daily Currency Update
USD - United States Dollar
The US dollar held below recent highs on Tuesday as the focus turns to the Federal Reserve members who are out and speaking following last week’s interest rate decision. Charles Evans, who is an FOMC member and head of Chicago’s Federal Reserve said that inflation is largely ‘temporary’ and will subside once supply side pressures have eased. While vice-chair Richard Clarida said that conditions to raise rates could be met by the end of 2022. Both sets of comments would indicate that the Federal Reserve still isn’t in a big rush to raise interest rates.
Annual PPI came in at 8.6% in October, slightly below expectations at 8.7%. But the month-over-month PPI rate, which measures the change in price of finished goods and services sold by producers and an indicator of consumer inflation, rose to 0.6% in October vs. expectations at 0.5%. The dollar hardly reacted to the data and continued to trade around 94.00 on the US Dollar Index at the time of writing.
Key Movers
The pound had recovered some of its losses it suffered against the US dollar last week when rates dropped to below 1.3500. This saw the pair trade near one-year lows. UK GDP figures are set to be released on Thursday and could act as another anchor for the pound. Following the surprise decision from the Bank of England to keep rates on hold last week, it would appear it is going to be a while before the pound rises back to above 1.3900. GBPUSD was down 0.05%, sitting around 1.3554 at the time of writing.The Australian dollar lost ground against the US dollar on Tuesday after a rally from the previous day. The Australian dollar had given up mid-year highs in the wake of the RBA policy update last week. AUDUSD was down 0.54% trading around 0.7382 at the time of writing.
Expected Ranges
- EUR/USD: 1.1572 - 1.1605 ▼
- GBP/USD: 1.3534 - 1.3599 ▼
- AUD/USD: 0.7371 - 0.743 ▼
- USD/CAD: 1.2429 - 1.2481 ▲