EUR/USD, USD/JPY flows: USD falls on softer PPI

Softer than expected US PPI has put the USD on the back foot in early US trading, with the JPY and the AUD seeing the biggest gains. The PPI data is typically less market moving than CPI, but the USD rise on CPI yesterday was based on only a very marginally stronger than expected headline number. Today’s PPI, showing a flat core against a 0.2% rise expected, is more clearly on the soft side, so justifies a reversal of yesterday’s USD gains. But all of this activity in the last coupe of days is probably of limited relevance, with the dots and the tone of this evening’s FOMC likely to be the driver into tomorrow’s ECB and BoE central bank meetings.