Source: ForexYard
Today’s producer price index (PPI) data released by the US Bureau of Labor Statistics brought to light the solid growth in inflation across the United States. Last month’s 0.7% growth was one-upped today with April’s reading coming out at 0.8%, above the forecast 0.6%.
Though US retail sales came out slightly below expectations this past month, the inflationary figures grant support to those arguing for an interest rate hike by the Federal Reserve this quarter. While a tightening of monetary policy is not likely, the continual rise in inflationary pressure could generate an adjustment to outlook portfolios, which will likely help the US dollar regain much of the strength it lost since 2010.
Supporting the USD’s recent surge, moreover, is systemic weakness coming from Europe’s manufacturing and industrial sectors. In line with what forex traders have witnessed in much of Europe these past several weeks, today’s manufacturing reports out of the United Kingdom and industrial production figures from the euro zone all revealed sluggishness.
The impact on the British pound (GBP) and EUR have been felt, with both currencies pulling lower in today’s early sessions against the USD. The dollar has been higher against most of its counterparts due to heightened risk aversion, but also since a significant portion of forex market participants are bailing out of the euro in exchange for safety from the region’s debt woes.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.