Dollar Pulls Back on Dovish Dudley

The dollar has fallen back overnight after more dovish comments from the Fed’s Dudley and from worse than expected US PPI data. Dudley’s comments that the US is unlikely to see 2% inflation in the medium term hit market confidence after some better numbers in the last week had helped the dollar to rally.

Prior to Dudley speaking lower than expected PPI data (-0.1% m/m against exp +0.1%) had started to put a dampener on the dollar and overall the Dxy finished the day 40 points off and back near this week’s lows around 93.30.

Today, the main focus for the market will be on the crucial US CPI data due out in the NY session with expectations for a 0.2% print across the market, anything below that should see some further downside for the dollar into the weekend.

Elsewhere in the market, traders were still paying close attention to the situation between the RoK and the US with regard to potential missile strikes aimed at Guam. There is still concern in the market that this situation could escalate and Gold, Chf and Jpy all remain bid as we enter today’s Asian session.

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