Kathy Lien is Director of Currency Research at GFT, and runs KathyLien.com.
Kathy has a Bachelors degree in Finance from New York University. Kathy has written for Stocks and Commodities, CBS Market Watch, ActiveTrader, Futures and SFO Magazine. She is frequently quoted on Bloomberg and Reuters and has taught seminars across the country. She has also hosted trader chats on EliteTrader, eSignal, and FXStreet, sharing her expertise in both technical and fundamental analysis.
According to the US producer prices released this morning, inflation is back, which may keep the Federal Reserve on hold for far longer than most traders may have been anticipating. The US Labor Department reported a 2 percent monthly rise in producer prices with a 1.3 percent monthly gain in core prices.
For those traders who have cut out early for the holiday, they have missed out on a strong dollar rally. In the past three sessions, the dollar has rallied 210 points against the euro, 195 points against the pound and 135 points against the Japanese yen.
The greenback went into Wednesday’s North American session constrained to modest ranges against most of its major pairings. This changed just prior to the open of US capital markets in New York though when the Commerce Department released its retail sales report for November.
Fully prepared to sail through Monday’s session on a relatively quiet calendar, dollar-denominated pairs were instead put into motion by a number of factors outside the realm of the rigid docket.
The US dollar, and currency market as a whole, will be given its first true chance tomorrow to establish whether volatility has really returned. Though the greenback has proven market moving on more than one occasion since the surprise return of volatility during the low liquidity environment two weeks ago, Friday’s NFPs will act as the fundamental litmus test.
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