ForexSpirit

So this morning’s economic data painted a mix bag for the US economy. Housing starts and building permits came in as expected: dire. PPI data came in very hot, with overall PPI showing at 1.2%, double the expected consensus, and even core PPI jumped to 0.7%, well above the expected 0.2%.

The market reaction to the data was pretty interesting. The London session today saw a new low reached at 1.4629 before inching its way back up to 1.47 in the face of stronger than expected ZEW economic sentiment. When the PPI data was released price inched down looking to retest the low from earlier in the day. It never quite made it and has since rebounded back up to 1.47 again.

For any continuation of the dollar rally, positive European data and weak US data needs to be ignored and positive US data acted upon. We haven’t seen much of that today which means that we might be starting to see a shift in momentum. If the explosive inflationary pressure contained in today’s PPI data doesn’t give the dollar continued impetus, what will?

I’ve also attached a chart showing the two trades I’ve taken so far this month that were detailed in yesterday’s post. Sometimes it’s far easier to visualise these things.