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US Producer Prices Index fell unexpectedly, Reflecting a Drop in Energy Costs.


US stocks slid on Thursday and erased gains on speculation the rally that followed softer inflation data went too far, with Federal Reserve still setting monetary policy tight. A key measure of US producer prices unexpectedly fell for the first time in more than two years, mainly reflecting a drop in energy costs. A similar result to the consumer prices report on Wednesday, both the overall and core figures were softer than forecast. However, inflation remains stubbornly high and will likely keep the Fed on a hawkish path to curb it. Meanwhile, equities have been bolstered by a better-than-expected earnings season, and those companies that have trailed analysts’ estimates were rewarded with the biggest gains in at least five years.

The benchmarks, S&P500 and Dow Jones Average Industrial were both little changed down on Thursday after the market consumed CPI numbers. Five out of eleven sectors stayed in positive territory, as Energy and Financial sectors performed best among all groups, rising 3.19% and 1.02% respectively. It’s worth noting that big Tech underperformed as Nasdaq 100 more than 20% above its June lows, and the index slid 0.6% on daily basis for the day.

Main Pairs Movement

US dollar was slightly lower on Thursday, following a dramatic 1% loss the previous day when data showed U.S. inflation was not as hot as anticipated in July. The DXY index edged lower since the Asia trading session and touched a daily-low level below 104.6, and then rebounded to a level above 105.2.

The GBP/USD slid with a 0.11 % loss on daily basis, as the market amid a risk-off impulse while the greenback weakened. The cables witnessed fresh upbeat transactions during the Asian trading session and then lost bullish momentum and fell to a level below 1.220. Apart from that, investors needed to keep an eye out for the critical GDP report on Friday, to confirm the slowdown of economic growth across the UK. Meantime, EURUSD has turned sideways around 1.032, and the pairs advanced with a 0.2% gain for the day.

Gold declined with a 0.15% loss on daily basis, as Federal officials keep their hawkish stances. XAUUSD oscillate in a range from $1,783 to $1,799 marks. WTI and Brent oil both surged on Thursday, rising 2.62% and 2.13% respectively.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
GBPGDP (YoY) (Q2)14:002.8%
GBPGDP (QoQ) (Q2)14:00-0.2%
GBPGDP (MoM)14:00-1.2%
GBPManufacturing Production (MoM) (Jun)14:00-1.8%
GBPMonthly GDP 3M/3M Change14:00-0.3%