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U.S Inflation Data Ready to Rattle Markets and Traders

Another Day to Prove some of us are Fools

The U.S will publish its PPI data in a few hours time. The outlooks from many experts regarding the Federal Reserve have been rather suspicious when contemplating the U.S central bank. However, the results of the Non-Farm Employment Change numbers on the 3rd of February, and this Tuesday's rather stubborn Consumer Price Index reports have created doubt among the 'experts'.

  • Forex and equities and their related indices will react to the publication of the Producer Price Index statistics today and create price velocity that day traders may find dangerous.

  • On the surface it appears many Forex pairs have begun to search for a calm middle ground leading up to the release of the PPI report. Perhaps positions are on hold until the release of the inflation data.

  • Traders should not be tempted and get stuck in tranquil waters that could turn into seas that drown their victims later.

Day traders who choose to wager before the reports are published today are essentially gambling with their money unless they have direct knowledge regarding today's outcome. The rather comfortable mid-term bearish trend in the USD against most major currencies has been stopped cold since the 3rd of February.

GBP/USD Five Day Chart

Outlook regarding the U.S Federal Reserve has gone from scorn and mockery and become a rather more sedated acknowledgement that inflation is rather robust. Today's PPI numbers will provide evidence and clarity. If the number via the Producer Price Index is stronger than anticipated it will certainly create a foundation for the 'promised' 0.25% rate hike in March, but also set the road for more hikes to potentially come.

Questions remain loud. The better than expected jobs numbers a couple of weeks ago was a cumbersome development for financial houses paying attention to recent layoffs from top companies and betting on weaker data. When hiring proved to be stronger than anticipated it could be pointed out that the employment numbers were looking backwards and not forward. Yet, the strong Retail Sales numbers and the improving Empire State Manufacturing reading yesterday are signs the U.S economy remains in a better place than forecasted. Recession may not be around corner.

Day traders need to be cautious and the 'experts' may want to look for their safe places today.


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