The Empire State Manufacturing Index showed a surprise to the upside with a rebound from the previous month’s decline. Data shows that business conditions in New-York improved on the -11.1 in November to a lofty 10.6 in December. On the back of this news USD/JPY rallied to test the 84.00 on positive dollar sentiment.
Inflationary pressure remain subdued as today’s CPI m/m reading of 0.1% indicates that producers are not passing on the slight rise in PPI m/m. Yesterday we saw producer inflation edge slightly upwards with the U.S Producer Price Index m/m show a reading of 0.8%, beating estimates of 0.6%, and exceeding last month’s 0.4%.
The Euro suffered as concern over the region’s sovereign debt issues continue. Moody’s put Spain’s credit rating on review for a potential downgrade. The market had put Ireland’s current debt issues to the back of their mind’s in the past few days of trade, however, today’s headlines over Spain’s fiscal position has fears of contagion back as a driver of price for the Euro. EUR/USD temporarily fell below 1.3300 levels, but has since recouped some of the losses. Thursday’s EU summit now becomes the focus of market attention.
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