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Market Overview
Greenback Unaffected by Soaring PPI inflation
The US dollar slipped on Friday and failed to appreciate
after strong inflation PPI inflation and the dollar index was trading only
marginally higher on the day, well down from its daily highs reached earlier in
the day.
The latest data showed that US PPI inflation accelerated
higher to 2.9% year-on-year in October, up from 2.6% previously, while analysts
had expected a slowdown to 2.5%. Moreover, the core inflation gauge also rose,
although marginally and printed 2.6% from 2.5% previously. Monthly changes also
rose more than doubled.
Investors will now focus on the Michigan consumer sentiment
index for November, which is seen declining slightly to 98.0 from 98.6 in
October. However, it still remains very optimistic. Moreover, wholesale
inventories will be released shortly after.
US stocks are set to open 0.5% lower as investors took
profits from this week’s rally and sentiment worsened after yesterday’s FOMC
decision, where the Fed confirmed it is ready to continue raising rates at the
current pace, despite the recent correction on the equity markets.
US bond yields were also lower on the day, but rose after
the PPI report, with the 2-year yield just 5bps shy of the psychological level
of 3.0%.
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