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OANDA Forex Blog 2008-08-20

Our worst fears of Tier 1 financial failures coming to fruition remains front and center in the Capital Markets, even outpacing global concerns of ‘another cold war’ happening. The greenback had lost some of its technical luster yesterday. Is the market giving us another opportunity to own it again?

The US$ is stronger in the O/N trading session. Currently it is higher against 14 of the 16 most actively traded currencies in ‘whippy’ trading range.

Yesterday, US PPI jumped more than expected last month, up +1.2% vs. consensus expectations of a +0.6% advance. Core-PPI, (ex food and energy) rose by +0.7% vs. a +0.2% expectation in July. Market reaction expects the headline ‘pop’ to get discounted (someone should convince Fisher). The headline was slower than the previous months (+1.8%), but probably more disturbing for the Fed was the spike in core compared to the prior month’s +0.2% print. Analysts explained away the spike believing that lagged effects of energy prices sparked...