USD: Breaking News: US Annual PPI Inflation Falls to 2.2% in May
The U.S. Producer Price Index (PPI) data for May showed a headline inflation rate of 2.2%, down from 2.3% in April and below the market expectation of 2.5%. Meanwhile, the Core PPI, which excludes volatile items like food and energy, remained steady at 2.3% compared to April. On a monthly basis, the PPI increased by 0.20%, while the Core PPI showed no change.
USDJPY is moving in Ascending channel and market has rebounded from the higher low area of the channel
Following the release of this lower-than-expected inflation data, the U.S. Dollar encountered selling pressure in the market.
The US Bureau of Labor Statistics released data showing that the Producer Price Index (PPI) for final demand in the US increased by 2.2% on a yearly basis in May. This figure was slightly lower than April’s revised increase of 2.3% (originally reported as 2.2%), and it fell short of market expectations which were anticipating a rise of 2.5%.
Similarly, the core PPI, which excludes volatile food and energy prices, rose by 2.3% year-on-year in May. This growth rate was below both April’s increase and the market consensus of 2.4%.
On a monthly basis, the PPI decreased by 0.2%, indicating a slight decline in prices for final demand goods and services. Meanwhile, the core PPI remained unchanged from the previous month, suggesting stability in prices excluding food and energy components.
USD: Rise in Jobless Claims, Soft PPI Increase Odds of Fed Rate Cut; S&P 500 Climbs
The latest Producer Price Index (PPI) data for May in the United States revealed a headline inflation rate of 2.2%, which was a slight decrease from April’s 2.3% and fell short of the anticipated 2.5%. Concurrently, the Core PPI, excluding volatile components such as food and energy, maintained its April level at 2.3%.
USDCHF is moving in Descending channel and market has rebounded from the lower low area of the channel
On a monthly basis, the PPI saw a modest increase of 0.20%, while the Core PPI showed no change. As a result of this unexpectedly lower inflation data, the U.S. Dollar faced downward pressure in trading markets.
The latest economic data releases have stirred movements in the financial markets, influencing expectations for Federal Reserve actions:
- Jobless Claims: Initial jobless claims increased by 13,000 to 242,000 for the week ending June 8. This marks the highest level since August 2023 and pushed the four-week average up to its highest since September last year, signaling softening in the labor market.
- PPI Inflation: The Producer Price Index (PPI) for final demand fell unexpectedly by 0.2% in May, contrary to forecasts of a 0.1% increase. On a year-over-year basis, the PPI rose by 2.2%, below expectations of 2.5%. Excluding food and energy, the core PPI was unchanged from April, disappointing expectations of a 0.3% increase. The 12-month core PPI inflation rate of 2.3% also fell short of the anticipated 2.4%.
- Market Reaction: Despite the weak economic indicators, the S&P 500 showed gains early on Thursday, reflecting investor optimism potentially fueled by the prospect of Federal Reserve rate cuts. Following the data releases, markets increased the probability of a rate cut at the Fed’s September 18 meeting to 68%, up from 62% prior to the reports. Additionally, there is now a 69% likelihood that the Fed will implement two quarter-point rate cuts by the end of the year.
- Fed’s Stance: While recent inflation reports suggest a possible return to disinflationary trends, Fed Chair Jerome Powell emphasized that more data is needed to warrant a shift in monetary policy. The Fed remains cautious, monitoring both inflation metrics and labor market developments closely to guide its decisions.
In summary, the latest economic indicators have heightened expectations for Federal Reserve rate cuts amid concerns over softening economic conditions reflected in jobless claims and subdued producer price inflation.
USD: Breaking: US PPI Inflation Eases to 2.2%, Could Spark Bitcoin Price Rally
US PPI Data for the month of May printed at 2.2% versus 2.3% in the April month and 2.5% expected, Core PPI came at 2.3% versus same in the April month. Monthly basis came at 0.20% and Core PPI remained unchanged. US Dollar came under selling pressure after the PPI inflation data printed lower than expected today.
USDCAD is moving in Ascending channel and market has rebounded from the higher low area of the channel
The latest U.S. Producer Price Index (PPI) data revealed a surprising decline of -0.2% in May, contrary to expectations of a 0.1% increase. This marked the largest drop since October 2023 and cooled annual inflation to 2.2% from 2.3% in the previous month. Excluding food, energy, and trade services, the Core PPI remained unchanged, with its annual rate easing to 2.3% compared to April’s 2.4%.
These developments have sparked optimism in the market regarding a potential dovish stance by the Federal Reserve. However, Federal Reserve Chair Jerome Powell’s recent comments have tempered expectations, suggesting only one rate cut in 2024 as inflation still hovers at the upper end of their 2% target range.
Despite the Fed’s dot plot indicating the possibility of two rate cuts this year, Powell’s cautious tone following the PPI data release weighed on investor sentiment.
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