Forexlive European FX news wrap: Awaiting the US PPI report

• What is the distribution of forecasts for the US PPI?
• US December NFIB small business optimism index 105.1 vs 101.7 expected
• Bond yields slightly off the highs but the pressure remains
• Dollar seeks validation to start European morning trade
• ECB’s Holzmann says hope to hit 2% inflation target by year-end
• European indices post a rebound at the open today
• What are the main events for today?
• PBOC says will continue to take measures maintain stability in yuan exchange rate
• China December M2 money supply +7.3% vs +7.3% y/y expected
• Eurostoxx futures +0.6% in early European trading
• BOJ’s Himino: The likelihood of economy, prices moving in line with forecast is increasing
• BOJ’s Himino: Hard to say whether risk to inflation is skewed to upside or downside
• Dip buyers set to be rewarded for their efforts yesterday?
• Japan former FX diplomat Kanda still playing his part on commenting on the yen

It’s been a slow session in terms of newsflow and data releases. The overnight moves triggered by the news of potentially gradual tariffs hikes are slowly getting faded as we move into the key risk events. The focus remains on the US PPI and US CPI data as those can either exacerbate the recent moves or reverse them.

In the markets, the US Dollar is consolidating around the recent highs although it weakened a bit overnight on the tariffs news. The sentiment in the equity markets remains negative and some more bad news on the inflation front might lead to new lows.

Treasury yields remain firm around the highs as everyone’s waiting for the US inflation data. Given the aggressiveness in the recent moves, soft inflation numbers might provide better asymmetric trades. Gold has not been doing much after the roller coaster ride following the NFP report.

Crude oil is trading around the recent highs although the strong momentum waned a bit. We are very close to the $80 level on WTI. Finally, Bitcoin is trading above the NFP level after staging an incredible rebound from the lows.

This article was written by Giuseppe Dellamotta at www.forexlive.com.