The US$ is finishing Tuesday on a mildly firmer note ahead of the upcoming Q3 CPI and FOMC Meeting, after the November PPI rose 0.4% mm, 3.1% yy, versus expectation of 0.4% mm, 3.0% yy, the fastest pace in nearly six years. Stocks also liked the data and both the DJI and the S+P have made new all-time highs. Earlier in the day, Sterling had a brief rally after the November CPI beat expectations (3.1% v exp of 3.0%) although it quickly sank back to earlier levels and is closing at session lows. The commodity bloc currencies remain firm while the Yen is rangebound and the EU majors are heavy. In other data, the German ZEW economic sentiment dropped to 17.4 in December, down from 18.7, below expectation of 17.9, while the current situation gauge improved to 89.3, up from 88.8 and beat expectation of 88.7. The EU ZEW economic sentiment also dropped to 29.0, down from 30.9 and below expectation of 30.2. In the other markets, the metals are slightly lower, while WTI is down 1.8% on record US exports of oil and gas. At the end of the session, the dollar has given up some of its gains after headlines that US Senator, Rand Paul, feels unable to vote for raising the US budget deficit.
Wednesday is going to be another busy session, beginning with the NZ Food Price Index and then a speech from the RBA Governor Philip Lowe, which will be followed by the WBC Consumer Confidence, the Australian New Home Sales and anther RBA speech, this time form the RBA Assistant Governor, Kent. Europe will kick things off with the 3Q CPI and HICP (exp 0.3%mm/1.8%yy, HICP; 1.8%yy), the UK Unemployment Report (exp 4.3%, +4K.) and the EU Industrial Production and Employment change figures. The main focus of the session though will be on the US, with the release of the Q3 CPI (exp CPI; 2.2%; Ex-Food/Energy exp 1.8%), and then later in the day we get Janet Yellen’s last FOMC Meeting. A 25bp rate hike is fully written in and the focus will be on the future growth projections and the dot plots for 2018 and 2019.
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