The seasonally adjusted Producer Price Index for final demand rose more than expected in April, official data showed on Thursday. According to the Bureau of Labour Statistics, US producer prices rose 0.5% for the month of April, following the preceding month's 0.1% decline and surpassing analysts' expectations for a 0.2% hike. On a yearly basis, the Producer Price Index posted a gain of 2.5% in the reported month, the strongest increase since February 2012, compared to 2.3% registered in March. A 0.4% advance in prices for final demand services caused over 60% of the rise in the final demand PPI. That climb was mainly driven by higher costs of investment advice, dealing, securities brokerage and related services.
Furthermore, the report showed prices for goods and food rose 0.5% and 0.9% respectively, while energy prices climbed 0.8%, supported by a 3.9% jump in the gasoline cost. In the meantime, the so-called core PPI, which excludes volatile items, showed a monthly advance of 0.4% and a 1.9% gain year-over-year with both readings going beyond economists' forecasts.
US CPI and Retail Sales to focus on
USD/JPY muted ahead of inflation data
Despite strong second class US fundamentals yesterday, the Greenback failed to outperform the Yen, due to a drop in yields and stocks. Consequently, the exchange rate fell back under the 114.00 major level, while also putting the second support level, namely the weekly R1, to the test. Downside risks persist today as well, with key inflation data eyed. Disappointment could lead to another significant drop, with the main target being the 113.00 handle, where the 100-day SMA and the monthly R1 rest. On the other hand, technical indicators imply the USD/JPY pair is to edge higher again, in which case the 114.40 mark is still likely to limit the possible gains.Daily chart
Traders' sentiment remains bearish at 65%, whereas 55% of all pending orders are to purchase the Buck (previously 51%).
Right now 53% of OANDA clients are bulls, adding one percentage point from before, as the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients manage to retain a neutral outlook towards the US Dollar, being that 50% of their open positions are now short and the remaining 50% are long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar