USD flows: USD dips on weaker PPI
June PPI weaker than expected, sustaining the impression of subdued inflationary pressures despite tariffs. USD a touch weaker but positive equity market reaction suggests CHF vulnerable
US PPI slightly softer than expected at flat m/m in both headline and core, following the similarly soft CPI yesterday. US yields are a little lower in response, and the USD is also a touch lower, but there will be wariness about looking for any move to extend as the initial dip in US yields was quickly reversed yesterday, triggering a strong USD rally. Equities have also rallied, and the break to new highs in the S&P 500 was part of the reason for the rally in the USD and US yields on Tuesday. However, a break to another new high may be more difficult today, so the USD may settle near current levels. The CHF and scandis have shown the most weakness today, and the CHF in particular looks vulnerable if the risk positive tone continues.
