US dollar is trading slightly higher on stronger PPI statistics.
The US Dollar (USD) is slightly higher on Friday following a strong gain this week, with the rate differential being the primary mover. The question going forward for next week will be whether this upward increase in US Treasury rates was a bit exaggerated, given that the US Consumer Price Index (CPI) only modestly nudged up in September compared to the previous month. This contradicts what multiple Federal Reserve (Fed) officials have claimed this week, which is that US rates will fall when additional interest rate reduction from the Fed are verified.
Traders are keeping US interest rates elevated on the expectation that the Fed will lower rates less frequently.
The economic calendar is approaching the final components of this week’s jigsaw. The US Producer Price Index (PPI) release for September was already a positive surprise, as was the US CPI release on Thursday. The final data point will be the University of Michigan’s preliminary reading on consumer sentiment and inflation forecasts for October.
Daily Market movers: PPI data is hot.US Dollar Index trades above 102.50 but struggles to break above 103.00.
At 12:30 GMT, the US Producer Price Index figures for September are released:
Monthly headline PPI decreased to 0.0% from 0.2% the previous month, with core PPI falling in line with expectations.
It is dropped to 0.2% from 0.3% previously.
PPI inflation rate increased to 1.8%, up from 1.7% to 1.9% previously.
The annual headline PPI inflation rate increased to 1.8%, up from 1.7% to 1.9% previously. The core PPI rose to 2.8%, up from 2.4%, which was also revised up to 2.6%.
At 14:00 GMT, the University of Michigan preliminary reading for October will be announced.
Consumer sentiment is predicted to rise to 70.8 from 70.1. In September, 5-year consumer inflation estimates were 3.1%, with no prediction given.
Hurricanes in the southern United States may have affected the data.
There are a few Fed speakers to watch for on Friday:
At 13:45 GMT, Austan D. Goolsbee, head of the Federal Reserve Bank of Chicago, provides an opening remarks from the Community Bankers Symposium.
At 17:10 GMT, Federal Reserve Governor Michelle Bowman (2024 FOMC voting member) gives a virtual speech on community banking at the Federal Reserve Bank of Chicago Community Bankers Symposium.
Equities remain fragmented, looking for direction. The main European equities and US futures had minor losses and gains.
The CME Fedwatch Tool predicts an 84.0% possibility of a 25 basis point interest rate drop at the upcoming Fed meeting on November 7, with 16.0% expecting no rate cut. Chances of a 50 basis point rate drop have already been totally priced out.
The 10-year benchmark rate in the United States is currently trading at 4.10, which is higher than 4%.
