Article Highlights

  • U.S. headline PPI up by 0.5% vs. 0.1% estimate
  • U.S. core PPI showed 0.6% increase, stronger than 0.2% consensus
  • UoM preliminary consumer sentiment up from 80.0 to 82.6 in April
  • Chinese bond auction failed to hit target sales
  • G20 and IMF meetings held over the weekend
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Phew! What a relief for the dollar! Friday’s forex price action allowed the U.S. currency to put an end to the bloodbath, as EUR/USD held steady below the 1.3900 handle while GBP/USD retreated to a low of 1.6717. USD/JPY edged slightly lower but found support at the 101.50 minor psychological level.

Data from the U.S. was stronger than expected, as the economy showed an increase in producer prices and an improvement in consumer sentiment. The headline PPI printed a 0.5% uptick while the core version of the report had a 0.6% increase, stronger than the estimated 0.2% rise. The UoM preliminary consumer sentiment index for April climbed from 80.0 to 82.6, outpacing the estimate at 81.2.

Over the weekend, the G20 and the IMF held meetings to discuss the fate of the global economy. It appears that there is a bit of conflict brewing as the U.S. failed to ratify the proposed reform package which mostly involves support for emerging economies. Aside from that, leaders also warned that the crisis in the euro zone may not be over yet and that it’s too early to say that the region is recovering. ECB member Couere said that the central bank is ready to boost asset purchases to counter inflation while Draghi reiterated that further euro appreciation might warrant easing measures, which explains why EUR/USD and EUR/JPY gapped lower over the weekend.

There are no major reports lined up for today’s Asian trading session so we might see a little bit of consolidation prior to the top-tier data up for release later on. Do keep close tabs on news events that could affect overall risk sentiment though!

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