US PPI Beats Expectations, Housing Mixed – USD Rises
The US producer price index rose by 0.1% in January, better than a drop of 0.2% expected. Core PPI also beat by 0.3%, with 0.4% against 0.1%. Year over year, the figure is -0.2% for , better than ‘0.6% predicted,.Core y/y is up 0.6%, better than 0.4% predicted. These numbers are encouraging for the Fed, that recently expressed worries about inflation.
Housing data is mixed: building permits stand at 1.202 million, marginally above 1.2 forecast and a slide of 0.2%. t and housing starts are 1.099 million, worse than 1.17 forecast and a slide of 3.8%.
The US dollar is stronger with EUR/USD extending the fall and inching closer to the 1.11 level. USD/JPY is at 14.30 and the greenback is also a bit higher against the pound and against commodity currencies.
Markets are still focused on the big picture: what’s going on in China and with oil prices. On the former, worries have re-surfaced about the devaluation of the Chinese yuan after the authorities set it on a lower rate. Regarding oil, there was news about an agreement for a production freeze between Saudi Arabia and Russia, but Iran is clearly not in the game, so oil prices struggle with regaining $30 on WTI Crude Oil.
We will shortly get the US industrial output data from the US but the big event awaits us only much later: the FOMC Meeting Minutes.
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