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US Data shifted bulls a bit off their pre-open axis

Market Analysis


The dollar moved marginally lower following the mix of data, where headline PPI was a tick warmer than consensus, and in-line for the core reading, and retail sales missed the mark both overall, and ex-autos. EURUSD headed to 1.2396 highs from near 1.2380, as USDJPY slipped to 106.31 from 106.57. Equity futures continue to indicate a higher Wall Street open.

U.S. February PPI rose 0.2% with the core rate up 0.2% as well. There were no revisions to January where gains of 0.4% were recorded for both. The 12-month growth rates sped up a little to 2.8% y/y for the headline, from 2.7% y/y, and 2.5% y/y for the ex-food and energy component compared to 2.2% y/y. The headline is a little firmer than expected, though the more tame CPI yesterday will mitigate inflation worries somewhat. On the other hand, US February retail sales released as well. US Retail sales fell 0.1 % with the ex-auto component up 0.2%. The 0.3% January drop was revised higher to -0.1%, and the unchanged sales ex-auto figure was nudged up to 0.1% (while December numbers were bumped down too, for three straight headline declines). The breakout of the data were disappointing.

Meanwhile, in general, the biggest loser so far today was the Australian dollar. Aussie has outperformed today, presently showing a 0.7% gain on the U.S. buck, though slightly off its highs. The high is 0.7916, which is the loftiest level seen since February 20th. The market reportedly absorbed a flurry of offers around the 0.7900 mark. RBA’s Kent put some wind in the Aussie’s sails, saying earlier in the day that the current pace of growth has raised the risk of pressing CPI higher and that markets may be under pricing the risk of fast growth. This rise today extends gains seen since news that Australia will be exempted from the Trump steel and aluminium tariffs, though caveats apply here as Australia will still be exposed via its massive iron ore exports (the base metal of steel) to China, while reports that Trump is readying tariffs targeting Chinese imports of goods into the U.S. may also have indirect consequences for Australia’s raw material exports.

Hence AUDUSD remains in the uptrend, with next intraday resistance area at  0.7918 – 0.7837. Support comes at 0.7877-80.

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Andria Pichidi

Market Analyst


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