PPI Data Pushes Dollar to New Highs, Gold Faces Pressure

September’s PPI data reveals stubborn inflation, pushing the dollar higher. As Asia digests the news, gold faces pressure while liquidity remains low on Columbus Day.

Following Thursday’s CPI surprise, Friday’s Producer Price Index (PPI) data showed inflation pressures persisting. Core PPI rose 0.2% month-on-month (MoM) in September, accelerating from 2.6% to 2.8% year-on-year (YoY). Though in line with forecasts, this uptick surpassed market expectations, signaling inflation remains stubborn. Headline PPI eased marginally, slipping from 1.9% to 1.8% YoY, but it exceeded the forecast of 1.6%.

This data underscored ongoing inflationary concerns, maintaining demand for the U.S. dollar (USD). The Dollar Index (DXY) nearly breached the 103 level before settling at 102.91 by Friday’s close. In contrast, gold spot prices rallied on Thursday and Friday, closing almost 2% higher at $2,657.26 per ounce. However, with the start of the Asia session, gold opened lower, facing downward pressure as markets adjusted to inflation data.

Impact on the Asian Session

Asian markets are bracing for continued dollar strength after the U.S. PPI report. The DXY crossed the 103-mark, signaling continued upward momentum, while gold opened lower at $2,646.06/oz, sliding further as trading progressed. The precious metal could face headwinds during today’s trading as inflation concerns buoy the USD.

Dollar Index (DXY) Outlook

Columbus Day marks a U.S. bank holiday, leading to lower liquidity and potential volatility during the U.S. session. Market participants will closely watch Federal Reserve Governor Christopher Waller’s speech today at Stanford for hints on the future direction of Fed monetary policy, especially after the recent stronger-than-expected inflation readings.

Next 24-hour bias for the DXY: Medium Bullish.

Gold (XAU) Outlook

Gold could face selling pressure in the short term, with lower liquidity during the U.S. holiday. Traders will monitor Waller’s remarks for insights on the Fed’s policy path, which could influence gold’s direction as inflation concerns linger.

Next 24 hours bias for gold: Weak Bearish.

PPI Data Pushes Dollar to New Highs, Gold Faces Pressure

Impact on Key Currencies

• Australian Dollar (AUD): Demand for the greenback pushed the AUD lower, gapping lower at 0.6733 and edging toward the 0.6700 level. Given the strong USD, the AUD is expected to remain under pressure.

Next 24 hours bias for AUD: Weak Bearish.

• New Zealand Dollar (NZD): The NZD weakened further, opening at 0.6089, following the Reserve Bank of New Zealand’s rate cut last week. Investors are waiting for Governor Adrian Orr’s speech, which may include discussions on monetary policy.

Next 24 hours bias for NZD: Weak Bearish.

• Japanese Yen (JPY): As Japanese markets close for Health-Sports Day, traders expect the JPY to remain subdued. USD/JPY closed at 149.13 last Friday, and with higher demand for the dollar, the pair could edge higher during today’s session.

Next 24 hours bias for JPY: Medium Bullish.

• Euro (EUR): The EUR is struggling against a stronger USD, sliding towards 1.0900 in early Asia trading. Without major economic data releases today, the Euro may continue to weaken.

Next 24 hours bias for EUR: Medium Bearish.

• Pound Sterling (GBP): Similar to the EUR, the GBP has been under pressure, gapping lower at the start of the session. Without key data releases today, the GBP could face further downside.

Next 24 hours bias for GBP: Medium Bearish.

Oil Outlook

Oil prices faced some pressure early Monday due to weak Chinese economic data and inflation concerns. WTI crude opened lower at $74.78 per barrel, with downward momentum likely to continue as inflation worries weigh on global demand outlooks.

Next 24 hours bias for oil: Weak Bearish.

As markets remain sensitive to inflation data and central bank comments, traders will closely monitor speeches from key policymakers, particularly Fed Governor Waller, to gauge the path for future interest rate moves. Lower liquidity due to bank holidays in the U.S. and Japan could lead to irregular volatility across currencies, commodities, and equity markets today.

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