- US Data: PPI disappointed market consensus, while Empire Index soars.
- The dollar falls after the economic reports and then reverses.
- USDJPY recovers all IPP losses, after a rebound of more than 150 points.
The pair USDJPY it recovered more than 150 points during the last few hours, rising back to the 139.50 area. Earlier, the pair hit fresh two-month lows at 137.62, following the US PPI report.
Inflation down, activity up
The Producer Price Index (IPP) rose 8% year-over-year in October, down from the 8.3% market consensus and 8.4% in September. It was the lowest reading since mid-2021. The numbers help raise expectations that the Federal Reserve could rein in its rate hikes. The Empire Manufacturing Index soared in November from -9.1 to 4.5, beating expectations.
Federal Reserve Bank of Philadelphia President Patrick Harker said Tuesday that he is not overly concerned about inflation expectations. “As long as we move consistently to bring inflation down, we can pause.”
In Asian time, Japan reported that GDP unexpectedly contracted by 0.3% during the third quarter. It was the first negative reading since the third quarter of 2021. “Weak inventories and net exports were the main drivers. Simply put, this is why policymakers are concerned about removing stimulus too much.” soon. For us, this is a green light to buy USD/JPY. The next BOJ meeting is on December 19-20 and another dovage is expected,” Brown Brothers Harriman analysts said.
The dollar goes down and then up
The dollar reacted as initially expected after the PPI, falling sharply to new lows across the board. However, it then reversed sharply, rising above its pre-PIP level, although US yields remain lower throughout the day and amid rising equity prices.
USDJPY is hovering above 139.00, still with a short-term negative bias, but far from the lows. A drop below 138.50 would increase bearish pressure, while above 139.60, the dollar could gain strength to test the daily high at 140.60.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
