PPI Inflation Data
The first important data of the week will be released tomorrow. The PPI inflation data will be released at 8:30 CET. PPI is expected to rise by 0.2% month-on-month. Any data that is in line with expectations or below expectations will be bullish for the dollar as it will keep the dollar weak as a rate cut in September is more likely. A PPI that is above expectations is quite bearish as it will make it more difficult to cut rates in September as inflation is not in line with expectations. The market is expecting a rate cut due to recent recession fears.
Powell made it clear at the last FOMC meeting that a rate cut in September would only be considered if inflation data is in line with expectations. I personally do not expect a lot of risk aversion ahead of the PPI and CPI releases as inflation has been in line with expectations for the past few months. Any dips could be due to geopolitical news. The market knows this and will most likely try to buy ahead of good inflation data. If we put money in on Wednesday's CPI release, I think this can become a sell the news event
