Dollar at 18-Month High Ahead of PPI

PPI is being closely watched for any additional signals that could shape interest rate policy from the Federal Reserve. The market has fully priced in a 25-bps hike for the Fed’s December meeting, with a 50-bps hike under consideration. The Month-over-Month PPI Final Demand figure is expected to come in at 0.4%, down significantly from the previous month’s reading of 1.3%, and the Year-over-Year Final Demand figure is expected to come in at 6.6%, up slightly from the previous reading of 6.3%. PPI coming in hotter than expected would likely result in Traders adding to bets that the Fed will hike more aggressively over the coming months.

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EUR

The Euro is down against the Dollar this morning on the back of mixed economic data out of the Eurozone. Gross Domestic Product (GDP) for the third quarter of the year came out in line with expectations this morning at 0.4% Quarter-over-Quarter and 1.3% Year-over-Year. Both figures reflect no change from the previous reading. Quarter-over-Quarter and Year-over-Year employment figures both fell by 0.1% to 0.0% and 0.4% respectively. Traders are also of the opinion that the Federal Reserve will hike interest rates more aggressively than the European Central Bank, adding further headwinds for the common currency.

JPY

The Japanese Yen has weakened to its worst position in nearly two months but has recovered some losses as a result of verbal intervention warnings from Japanese officials. Japanese Finance Minister Satsuki Katayama called the depreciation ‘one-sided and rapid’ and stated that Japanese officials will remain in close coordination with the U.S. Treasury, putting Traders on intervention watch as Japanese officials tend to focus on the speed and chaos of currency moves rather than specific rate levels. Despite this, the market is not pricing in significant intervention risk as of time of writing.