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Softer US PPI Details Prompts Moderate Antipodean FX Reversal

FOREX
  • Softer details within today’s US PPI data means the Fed’s preferred core PCE reading will give a softer signal on inflation that Wednesday’s CPI. As such, equity markets were buoyed across Thursday, modestly weighing on the USD index and boosting the likes of AUD and NZD.
  • Both AUDUSD and NZDUSD have risen just shy of half a percent, taking back a portion of the significant losses from the prior session.
  • The sharp sell-off in AUDUSD Wednesday signals the end of the recent bull phase and reinstates a bearish threat. A continuation lower would signal scope for a test of support at 0.6478, the Mar 5 low. Clearance of this level would expose the bear trigger at 0.6443, the Feb 13 low.
  • USDJPY rose as high as 153.32 and continues to trade above the 153.00 mark as we approach the APAC crossover. Bullish conditions were cemented Wednesday on the break of the significant 152.00 level, however, markets will remain wary of Japanese MOF strengthening their rhetoric on potentially intervening in the currency.
  • EURUSD touched a near one month low at 1.0699 in the aftermath of the ECB, where the governing council left rates unchanged and pointed to a possible rate cut in June in its post-meeting statement on Thursday, while saying it would keep a data-dependent approach and not commit to a pre-determined easing path.
  • UK growth data headlines the calendar on Friday, before UMich consumer sentiment and inflation expectations will be the US focus.
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