Forex: GBP/USD: US PPI with best growth since June last year

on Jan 15, 2014
Updated: Oct 21, 2019
Listen Wednesday, January 15th:_ The US Bureau of Labor Statistics today released the Producer Price Index for December, which logged its best rate of growth in six months due to a strong recovery in gasoline prices.

The December PPI was up a seasonally adjusted 0.4 percent on November, in line with market expectations and arresting a run of three consecutive months of contraction.
Year-on-year, producer prices grew 1.2 percent from the same period in 2012, after rising 0.7 percent y/y in November.
The Core PPI, which excludes potentially volatile food and energy items, rose 0.3 percent, three times the expected rise and the measure’s best performance since July 2012, after being up 0.1 percent in the previous month. Tobacco accounted for nearly half the increase.

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Year-on-year, the December Core PPI increased 1.4 percent after the 1.3 percent gain in November.
Producer gasoline prices jumped by 2.2 percent, accounting for more than half of the increase in the energy index.
Also today, the Federal Reserve Bank of New York released its Empire State Manufacturing Index, which logged a significant rise to 12.51 points this month from the prior 2.22, revised up from 0.98. Analysts had been expecting a rise to 3.75 points.

The Index, which measures manufacturing activity in New York state, has now reached its highest point since May 2012 and the gain is boosting the view in the markets that the factory sector across the wider United States will continue to be strong this year.

Analysts at RDQ Economics point out though that the Empire State index showed a weak reading toward the end of last year, even as other manufacturing data improved. They write: “Taken at face value, however, this report shows a manufacturing sector that experienced a strong gain in orders at the beginning of the year, boosted shipments and employment significantly, and raised prices in the face of sharply rising input costs.”.

Cooper Howes of Barclay’s comments on the Index: “While some of the notable components have been volatile in recent months, we expect the index to remain in positive territory in the coming months as manufacturing activity continues to pick up.”
Earlier today, The Conference Board released its US Leading Index m/m for November, revealing a slight acceleration to 0.5 percent from the prior 0.4.

The GBP/USD has been in descent so far today, reaching an intraday low at 1.6324 – the lowest level since 24 December – and on the way breaking through the first three support levels for today. At the moment though, the pair is changing hands at 1.6345.
Resistances today: 1.6440, 1.6470 and 1.6500.
Supports: 1.6415, 1.6385 and 1.6360.


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