The US dollar retreated after favourable U.S. producer prices that indicated underlying inflation moderated a bit more in September, providing further evidence for the market to reason the Federal Reserve is done hiking interest rates.
The producer price index (PPI) for final demand rose 0.5% after accelerating by an unrevised 0.7% in August. Economists polled by Reuters forecast the PPI to gain 0.3%. Over the past 12 months the PPI increased 2.2% after advancing 2.0% in August.
Most Federal Reserve policymakers agreed that one more rate hike would be “appropriate” and emphasized the need to keep interest rates higher for longer as inflation continues to trend well above the central bank’s 2% target, the Fed’s September meeting minutes showed.
Gold prices jumped to a two-week high, supported by declining U.S. Treasury yields and dovish signals from Federal Reserve officials Raphael Bostic and Neel Kashkari. Crude extended fall for the second day, dropping nearly 2% as fears of disruption to supplies due to conflict in the Middle East receded a day after top OPEC producer Saudi Arabia pledged to help stabilize the market.
The yield on 10-year Treasuries was last down 5.2 basis points at 4.604%, an almost 30 basis point drop from a 16-year high of 4.887% last Friday after a strong jobs report.
The dollar index which measures the currency against six major counterparts rose 0.08% at 105.8610(At 11.50pm). MCX Gold future settled at 57940, up 0.54%. Silver at 69426 up 0.74%. Copper prices settled at 702.30 down 0.42%. Crude oil settled at 7017 down 2.01%. Natural gas settled at 277.80 down 1.07%.
Economic data and events scheduled today
Eurozone
At 5.20pm – ECB Monetary Policy Meeting Accounts
Above data could have a neutral impact on the Euro.
U.K.
At 11.30am-
GDP m/m. Data is foreseen at 0.2% from -0.5%.
Construction Output m/m. Data is foreseen at 0.0% from -0.5%.
Goods Trade Balance. Data is foreseen at -14.8B from -14.1B.
Index of Services 3m/3m. Data is foreseen at 0.1% from 0.1%.
Industrial Production m/m. Data is foreseen at -0.2% from -0.7%.
Manufacturing Production m/m. Data is foreseen at -0.3% from -0.8%.
At 2.00pm – BOE Credit Conditions Survey. Data is foreseen at 0.2% from -0.5%.
At 2.30pm – MPC Member Pill Speaks
Above data could have a positive impact on the pound.
China
Tentative – New Loans. Forecast is 2500B from the previous 1360B.
Tentative – M2 Money Supply y/y. Forecast is 10.7% from the previous 10.6%.
Above data could have a positive impact on the Chinese Yuan.
U.S.
At 6.00pm-
Core CPI m/m. Data is foreseen at 0.3% from previous 0.3%.
CPI m/m. Data is foreseen at 0.3% from previous 0.6%.
CPI y/y. Data is foreseen at 3.6% from the previous 3.7%.
Unemployment Claims. Data is foreseen at 211k from the previous 207k.
At 8.00pm – Natural Gas Storage. Foreseen at 85B from 86B.
At 8.30pm- Crude Oil Inventories. Foreseen at -0.4M from -2.2M.
At 11.30pm – Federal Budget Balance.
At 7.45pm – FOMC Member Waller Speaks.
All above data could have a volatile impact on the dollar.
India
At 5.30pm – CPI yoy. Data is foreseen at 5.50% from previous 6.83%.
At 5.30pm – Industrial production. Data is foreseen at 9.0% from previous 5.7%.
Above data could have a positive impact on the Rupee.