Yesterday’s trading session saw a significant reaction to the US inflation report which broadly printed in line with expectations. There was a slowdown in the pace of price rises with a month-on-month jump of 0.5% compared to last month’s 0.9% rise. However, the consumer price index on a year/year basis remained at 5.4%.
Surprisingly, the market took this report very well, extrapolating that the pace of inflation will continue to subside in the coming months and that the Fed’s transitory label could indeed be correct. The greenback weakened while US and European stocks elevated to new highs. The buck’s losses were limited with the $1.39 handle preventing the GBPUSD pair from moving higher.
Today’s session sees UK GDP numbers as well as manufacturing and industrial production. Additionally, there will be more US inflation indicators, this time it will be the producer price index, measuring the cost of materials, etc. US weekly initial jobless claims are scheduled too.
Written by Viv Savani. 8:53am, August 12th 2021
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