Why the markets are back where they were before the US PPI?

Read full post at forexlive.com

The US PPI came right in line with expectations even though the M/M figures were a bit higher (skewed by revisions). As always, the first reaction was algo-driven with a spike in the direction of the higher M/M reading sending the USD higher and stocks and bonds lower. When you look at the news or data in general though you should always ask yourself how that changes the future expectations. If it doesn’t, then you will often see the price fading the spike.

Recent examples I covered were the Canadian jobs data reaction here and the UK jobs data here. You might also want to read the quick guide on “how to trade the news”. Anyway, the market is more focused on the US CPI report because that’s what the Fed cares most about now (even though they target the PCE). So, after this brief algos party, we will likely see the market consolidating some more until the US CPI is out of the way.