Selling USD/JPY As PPI Jump in USD Fades
Skerdian Meta • 2 min read
The producer inflation report PPI (producer price index) hasn’t been much of a market mover, as the producer inflation doesn’t really translate exactly into the consumer inflation CPI (consumer price index). Although at this point in time when everything is centered around inflation and central banks are following these numbers for rate hikes, even the PPI is important for the US Dollar.
Last month we saw a 150 pip jump in the USD after the PPI report came in higher than expected, although the gains slowly faded. Friday’s PPI inflation showed a cool-off, but it came above expectations. That gave the USD a push higher across the board but once again the gains were lost.
US November Producer Price Index PPI Report
- November PPI YoY +7.4% vs +7.2% expected
- October PPI YoY was +8.0%
- PPI MoM +0.3% vs +0.2% expected
- Prior PPI MoM reading was+0.2% (revised to +0.3%)
- Core PPI ex-food and energy YoY +6.2% vs +5.9% expected
- Core PPI ex-food and energy MoM +0.4% vs +0.2% expected
- Prior core PPI ex-food and energy MoM +0.0% (revised to +0.1%)
- Goods +0.1% vs +0.6% prior
- Services +0.4% vs -0.1% prior
- Full report
USD/JPY H1 Chart – The 200 SMA Acting As Resistance
The highs keep getting lower on the H1 chart
This report led to a decent jump in USD/JPY worth around 130 pips, spiking to 136.90 from 135.60. There were similar moves in other USD pairs but they faded mostly as well. We decided to open a sell forex signal in USD/JPY as the 200 SMA was acting as resistance on the H1 chart above.
On the Daily chart at the top of the article, the 200 SMA (purple) held as support last Friday and USD/JPY bounced off that moving average. But, the 20 SMA (gray) has turned into resistance, pushing the highs lower, the main trend is still bearish here. So, we’re keeping a bearish bias for USD/JPY and will try to sell retraces higher.