THE TAKEAWAY: USD Producer Price Index (AUG); Initial Jobless Claims (SEP 8) > +2.0% versus +1.6% expected; 382K versus 370K expected > USDJPY BEARISH
A mixed bag of data this morning out of the United States has placed the US Dollar in a precarious position ahead of the Federal Reserve’s policy meeting scheduled to disband this afternoon, culminating in Chairman Ben Bernanke’s press conference at 14:15 EDT / 18:15 GMT.
Prices at the factory gate are increasing, according to the recent Produce Price Index report for August. On a monthly-basis, prices rose by +1.7% following a much more modest +0.3% gain in July, reflecting the jump in Crude Oil prices since early-June as well as the rise in agricultural commodities onset by dismal weather conditions in the western United States.
On a yearly-basis, prices increased by +2.0%, above the +1.6% expectation and four times the rate in July. Stripping the inflation indexes of the food and energy components, prices have were much more stable in August: the PPI increased by +0.2% as expected on a monthly-basis, in line with the consensus forecast; and the PPI increased by +2.5%, just below the +2.6% reading expected.
In addition to the Producer Price Index, Initial Jobless Claims for the week ended September 8 were released as well at 08:30 EDT / 12:30 GMT. Claims jumped to 382K from 367K, well-above the 370K consensus forecast provided by Bloomberg News. Following the poor August Nonfarm Payrolls report on Friday, there is clear evidence that the labor market is starting to turn south once more.
USDJPY 1-minute Chart: September 13, 2012
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the releases, the US Dollar was generally strong across the board, but the real winner was the Japanese Yen. The USDJPY fell from 77.60 to as low as 77.43 within the hour following the release, though it had rebounded back to 77.53 at the time this report was written. Meanwhile, the weakest pair thus far on Thursday, the AUDJPY, dropped from 81.10 to as low as 80.91 following the report, before rebounding to 80.98, at the time this report was written.
--- Written by Christopher Vecchio, Currency Analyst
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- Producer Price Index