US producer prices slip below 2.0%
The annualised producer price data in the US comes in at 1.8%, below forecasts of 2.0% and down from 2.2% in April. This should help see the CPI rate a little lower when we get the release tomorrow, so this could be seen as a minor USD negative, though this tends to get bypassed when consumer demand plays a larger part.
There is also the stronger USD which adds to lower import prices of raw materials, and this will also have been factored into the data. As such, we are not expecting a major reaction to the numbers this afternoon.
USD/JPY seems to have set off some USD buying, having decisively moved above the 108.50 mark, with eyes now on 109.00. We will need to see firmer stocks and a solid showing in Wall Street to build on these gains later on, but along with USD/CHF, the risk on USD pairs look to be the main gainers so far today.
EUR/USD was looking to test the highs seen at the end of last week and those from yesterday but now looks more likely to test under 1.1300, with the first major support point coming in at 1.1275 - if we get there.