Markets in limbo as US producer prices offer little fresh insight
It seems the main events from the week are now well and truly over, with today's US producer prices offering little fresh insight into the economy. Headline PPI rose 0.1% in Jun with ex-food and energy up 0.3%, but in light of the consumer price inflation (CPI) numbers yesterday, this report is a little redundant.
From here, markets are left to assume that the Fed will cut rates at the end of the month as part of an insurance policy to guard against global downside risks, but that there will be little else to follow after that until Sept or Dec, with a total of 50bps seen for this year.
It seems the market has priced this in, so we may see little aggressive movement either way, with higher long date yields helping to support USD/JPY ahead of 108.00 for now.
EUR/USD is also trapped between support ahead of 1.1200, but also well contained ahead of 1.1300, with 1.1280 the high on the week, and as yet, little interest to revisit this level in the near term.
Heightened risks that the White House administration is looking at ways of containing USD strength, so traders need to be on red alert should headlines alluding to this hit the wires. So far, talk has been minimal and contained to tweets from the president about the manipulation of over major economies on their respective currencies.