The market shrugs off the hotter PPI report

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The market shrugs off the hotter PPI report

The US dollar initially rose around 15 pips on the hot PPI data but quickly gave it back and then turned lower. There were no big caveats in the report as pipeline inflation is throwing off some red flags. That said, the CPI report yesterday was a preview of the higher number and the market took it in stride.

The same thinking is evident in the fixed income market where yields are down 5 bps across the curve. Speaking of the bond market, we've got this guy working on it.

USD/JPY has turned lower now and is down 90 pips to 153.49 and how now erased yesterday's jump on the CPI report.

It's not clear why the US dollar is selling off today. There is some angst building about the Republican ability to pass a tax cut. Last night, House Republican fiscal hawk Eric Burlison said of the latest budget proposal.

"It's pathetic... I'm inclined to not support it... Andy Biggs reminded us the growth and the interest on the national debt-- I don't even think that this covers the growth and the interest payments, right?"

They can only afford to lose two votes.

                This article was written by Adam Button at www.forexlive.com.

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