Forexlive Americas FX news wrap: PPI hits dollar but the trade doesn’t last | Forexlive

Markets:

• Gold up $6 to $1778
• WTI crude up 87-cents to $86.74
• US 10-year yields down 8.6 bps to 3.78%
• S&P 500 up 30 points to 3987
• NZD leads, CHF lags

Trading on Tuesday was really about two headlines. The first was a miss on PPI that kicked off a trade that was similar to CPI. The dollar fell hard across the board with USD/JPY crumbling to 137.69 as stops were run in a 160 pip move.

Elsewhere the moves weren’t quite as large but still remarkably big for a PPI report, especially one coming after CPI. As economists began to poke holes in the report and its unusual drop in services inflation, there were some second thoughts. In time, the entire USD move unraveled and against commodity currencies the dollar ended up higher than pre-data levels.

The moves were a reminder that this market is dialed into economic data and that will ring true again tomorrow with US retail sales.

The second big headline was the explosion in Poland killing two people. There’s no clarity on whose missile it was and why it sailed 7km over the border but all sides are trading accusations. The headlines initially sent risk trades spiraling and the euro down 70 pips but in time the market determined this wouldn’t be the trigger for WW3 and the moves unwound.

So in short, we had two large, headline-driven moves in opposite directions that both unwound. That leaves the market back where it was before US trading and with the US dollar sagging. That’s a sign of optimism continuing to build and it was helped along by a better forecast from Wal-Mart in earnings today.