The US dollar fell hard on PPI data, at least initially.
The dollar fell upwards of 60 pips across the board when the October producer price index was at 8.0% compared to 8.3% expected. It was seen as another sign that inflation has peaked and that the Fed needn't raise rates much above 5%.
The largest move was in USD/JPY, which fell 160 pips. It's since pared about 60 pips of that.
Some in the market are focused on the divergence in the report with services PPI down 0.1% while goods rose 0.6%. That's the opposite of what most were expecting with demand for services still solid.
Over in stocks, positive guidance from Wal-Mart kicked off a rally but this data has supercharged it. S&P 500 futures are now up 1.7%.
It's rare for the PPI report to move markets at all, especially when it comes after the CPI report. This just goes to show how focused the market is on economic data. That focus isn't going to change as both the market and the Fed tries to figure out where growth and inflation are going.
Here's some food for thought from Guy LeBas at Janney:
