US Pipeline Inflation Picks Up A Little More Than Expected

Published date: 11/07/2018

No real impact from the US PPI data just out. Pipeline inflation is in focus largely due to the potential feed-through of steel and aluminium tariffs. Although, higher than expected is only marginally so, as yet. The numbers will continue to be monitored further down the line and for as long as the Trump administration continues with their current trade policy plans.

Overall, the USD has been a little mixed today and of course, the main event will be the CPI release tomorrow. Traders will likely be keeping their powder dry until then, though despite the escalation of trade tensions after the US announcement last night, USD/JPY continues to grind away at the topside with little regard for the broader sentiment on risk.  The pair looks to be trading on autopilot at the moment.  Gold is still trying to push lower and this correlation looks to be sticking fast as US Treasury demand backs up price action in the spot rate.  

We continue to watch the 111.50 level, a breach of which could see us heading to 112.00 on some modest stop tripping. There are more offers at this figure level to contend with and we also have to see how the cash equity markets react once they open in a little under an hour.  

The DXY looks to have found a sticking point just ahead of 94.50 for now, with mixed flow reported in the rest of the majors. EUR/USD again moves up and off the 1.1700 mark after a very brief dip under this level in AM trade. More source stories on when the ECB should hike rates. This is becoming a regular occurrence now and the market may have acclimatised to this despite algo led knee-jerk reactions.


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