VOT Research Desk
In the most recent hours, the USDJPY pair rebounded more than 150 pip, returning to the 139.50 region. Prior to the US PPI news, the pair dropped to new two-month lows at 137.62.
In October, the Producer Price Index (PPI) increased by 8% from a year earlier, which was less than the market consensus of 8.3% and September’s reading of 8.4%. Since mid-2021, it was the lowest reading.
The figures add to rising hopes that the Federal Reserve would scale down its rate increases. In November, the Empire Manufacturing Index surged from -9.1 to 4.5, exceeding forecasts.
Patrick Harker, president of the Federal Reserve Bank of Philadelphia, stated on Tuesday that inflation forecasts are not causing him too much concern. As long as we’re consistently working to bring inflation down, we can pause.
The US Dollar initially reacted as expected after the PPI with a sharp decline to fresh lows across the board, but it then sharply reversed, rising above the level it had before the PPI, even as US yields remain down for the day and amid higher equity prices.
The USDJPY is hovering above 139.00, still with a negative bias in the short-term but far from the lows.
