USD Firms Following Inflation, Manufacturing Data

Higher Core Annual Rate Pushes Up US Yields

The Consumer Price Index (CPI) in the US rose 0.1% in November, with the core rate (ex- food and energy) climbing 0.1%. The headline rate was expected to rise 0.2%, while the core rate matched expectations.



Looking at the annual data, CPI was steady at +1.1% but core prices did rise to 0.8% from 0.6%. It had been expected to remain steady as well.

Stronger than expected inflation would push bond yields in the US, which acts to support the USD.

In today’s data, the stronger than expected core annual rate did the trick, and bond yields did move higher.

Empire Manufacturing Index Jumps in December

Helping was the Empire Manufacturing Index which rose to 10.6 in December from -11.4 in November.



That’s a 22 point swing. and another piece of positive news in the US data stream. The dollar stayed higher following the reports.

From the Release: “After dropping sharply into negative territory in November, the general business conditions index bounced back above zero, climbing 22 points to 10.6. The new orders and shipments indexes also rose above zero, while the unfilled orders index remained negative. The inventories index was negative, indicating that inventory levels were lower over the month. The indexes for both prices paid and prices received were positive and higher than last month, suggesting that prices rose, while employment indexes were negative, indicating that employment declined. Future indexes were generally at high levels—a sign that conditions were expected to improve over the next six months. Significantly, the future prices paid index was positive and rose sharply, indicating that respondents expected input prices to accelerate.”

Treasury prices pared gains, meaning yields pared losses, and gold futures extended losses.

US Industrial Production Hits Forecasts for November

At 9:15AM ET, the US released its Industrial Production figures. It showed output climbing 0.4% in November. That was around the median forecast of economists. Capacity Utilization rises to 75.2%. 
http://www.fxtimes.com/