Daily FX Market Review: PPI Data Comes In Soft, Dollar Takes A Hard Dump! 💩

By Investor Empires On Aug 13, 2024

Today, in the United States, the Producer Price Index (PPI) was released and showed an increase of 0.1% In July, which was less than the expected rate of 0.2%.

Excluding food and energy, the core PPI remained levelThe core producer price index showed a sharp decline on an annual basis from 2.7% in June to 2.2% In July.

In response, market expectations have shifted towards Faster pace of Fed rate cutsAs a result, the US dollar saw a significant decline in its value.

The Producer Price Index (PPI) tracks the prices of a wide range of goods and services in the United States, from raw materials to finished products, at the wholesale level.

The PPI is closely watched by market participants because it reflects the prices paid by producers for inputs, and is often It acts as an early indicator of inflation. Which can later be transferred to consumers.

If producers face higher input costs, they may pass these costs on to consumers by raising prices, which may eventually show up in consumer Inflation measures Like the Consumer Price Index (CPI) and the Federal Reserve’s preferred measure of inflation, the Core Consumer Price Index (Core PCE).

When the Fed cuts interest rates faster than expected, it narrows the spread between interest rates in the United States and interest rates in other countries. This makes US dollar-denominated assets less attractive to foreigners seeking higher returns. As a result, demand for the US dollar falls, causing its value to fall. To learn more, see our lesson, Why Interest Rates Matter to Forex Traders.

As the Bureau of Labor Statistics (BLS) prepares to release its July Consumer Price Index report, tomorrownow it is the Primary focus For clearer inflation forecasts.

Last month, we saw a significant drop in monthly change, with a negative print of -0.06% – the first in nearly two years and the lowest since May 2020.

For tomorrow’s release, expectations are: rebound To a positive change of 0.2% on a monthly basis.

The CPI report will be released on Wednesday. Whether the current decline in the US dollar will continue or reverse.

For more details on what to watch for, read our Event Guide: US CPI Report (July 2024) which is available to Premium Members.

Forex Market Drivers

Let’s review the price action in Forex today.

Which currency pairs made the biggest gains today?

New Zealand Dollar/US Dollar He was the leader of the group, and got 1.01% or 60 points.

As explained by us Foreign exchange market drivers page, New Zealand Dollar/Swiss Franc and GBP/USD He won silver and bronze today.

Looking at NZD/USD Trend Follow RatingIt shows rising classification.

The currency pair managed to climb back above most of its major moving averages, with the 200 SMA being the only dynamic resistance area.

But GBP/NZD Overbought/Oversold Rating He appears “neutral“

Which currency pairs lost the most today?

EUR/NZD He was the biggest loser, as he fell. 0.34% or 62 points.

Looking at EUR/NZD Pivot PointsThe price appears to be trading near pivotal support levels.

currency strength

What is the overall strength or weakness of the individual major currencies today?

Based on currency strength meter On MarketMilk™, New Zealand Dollar It was, without a doubt, the strongest currency, while US Dollar It was the weakest currency.

If we dig a little deeper and look at how the major currency pairs work Moved in the last 24 hoursWe can see how the NZD/USD pair rose after the PPI release.