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Producer Price Index rose, Market awaits Inflation data


US equity fell on Wednesday, with investors bracing for Thursday’s reading on consumer prices. Producer Price Index figures of 0.4% on Wednesday showed prices paid to US producers rose in September by more than expected ahead of a key measure of consumer inflation due Thursday that’s set to return to a four-decade high. It’s also worth noting that on the corporate side, PepsiCo Inc. jumped the most in more than two years after lifting its forecast for the year on the back of better-than-estimated third-quarter profit as drink and snack sales buck inflation. Moderna Inc. surged after Merck & Co. said it would exercise an option to work in partnership with the biotech on a messenger RNA cancer vaccine.

In the Eurozone, a selloff in long-maturity UK debt gathered pace after the Bank of England damped hopes it would extend its bond-buying support into next week. The yield on 30-year gilts surged above 5%, nearing levels that just last month drew the central bank’s invention, before easing again after the BOE snapped up billions in its daily operations. Elsewhere, oil in New York dropped below $88 a barrel on slowdown fears, and OPEC trimmed projections for the amount of crude it will need to pump this quarter.

The benchmarks, the S&P500 slipped into the negative area in the final minutes of trading, capping six days of losses to close at the lowest level since November 2020 and surpassing the previous low on Sep. 30. Seven out of eleven categories stayed in the negative territory, as Utilities got the worst performance among all groups, tumbled with 3.42% losses on daily basis. The Dow Jones Industrial Average and the Nasdaq 100 were little changed on Wednesday. The MSCI world index fell 0.3% for the day.

Main Pairs Movement

The US dollar was little changed on Wednesday, failing to preserve its upside traction and flirted with the 113.00 area following the release of FOMC meeting minutes. Fed officials determined that they needed to adopt and maintain a more restrictive policy stance to fight elevated inflation. But once the policy had reached a sufficiently restrictive level, it would be appropriate to keep it there for a period of time. As for now, investors await US inflation data for fresh clues about future rate hikes.

GBP/USD surged sharply on Wednesday with a 1.20% gain after the cable refreshed its daily top above the 1.112 mark amid the latest emergency program. On the UK front, reports showed that the Bank of England might be willing to extend its purchases beyond Friday and provide a boost to the GBP/USD pair. Meanwhile, EUR/USD remained stable and capped below the 0.9710 level after European Central Bank President Lagarde’s speech. The pair was down almost 0.05% for the day.

Gold advanced with a 0.42% gain for the day after climbing higher to touch the $1,677 mark during the US trading session, as the less hawkish FOMC minutes hint to moderate the hiking pace and underpinned the dollar-denominated gold. Meanwhile, WTI Oil retreated further with a 1.70% loss for the day after dropping to the $86.5 area ahead of the key event of the week in the US CPI report, as higher interest rates and recession fears both acted as a headwind for the oil price.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDEIA Short-Term Energy Outlook00:00 
USDFOMC Meeting Minutes02:00 
EURGerman CPI (YOY) (Sep)14:0010.0%
USDCore CPI (MoM) (Sep)20:300.5%
USDCPI (YoY) (Sep)20:308.1%
USDCPI (MoM) (Sep)20:300.2%
USDInitial Jobless Claims20:30225K
USDCrude Oil Inventories23:001.750M