U.S. inflation in focus

It seems that the U.S. Dollar's losses following Friday's job report are slowly being retraced. So far this week, the President of Philadelphia Fed Plosser and a head of Dallas Fed Fisher both advocated ending the stimulus programme earlier in 2014. Fisher even claimed he will be ready to support a reduction by twice the amount announced in December. While some can interpret these comments as a hawkish sign that speaks in favour of buck's strengthening, both Plosser and Fisher are just a part of the hawk camp. It means comments of this nature do not come as a surprise from these FOMC members. 

On the data front market's attention was capped by U.S. producer prices on Wednesday. And markets were not disappointed, with Dollar being boosted against the Euro up to 1.3599. Wholesale prices in the United States advanced in December for the first time in three months, posting the smallest annual gain in five years, suggesting businesses face little pressure to increase prices. The Labour Department said producer prices climbed 1.2% last month on a yearly basis, exceeding markets expectations for a 1.1% pick-up and accelerating from a 0.7% rise a month earlier. On a monthly basis factory gate inflation inched higher 0.4%, while core measure jumped 1.4% over the corresponding period. Weak inflationary pressure gives the Fed room to move gradually as they begin trimming down their monthly asset purchases.