USD: Inflation data and energy pressures – Rabobank

Rabobank strategists note that US stocks have risen even as the Hormuz crisis threatens higher energy costs. They point to upcoming United States (US) Producer Price Index (PPI) and the National Federation of Independent Business (NFIB) small business optimism index as key for gauging upstream inflation, pricing power and labour costs, suggesting the Dollar’s outlook will hinge on how energy and supply‑chain pressures filter into broader US inflation dynamics.

PPI and NFIB in focus for markets

"Today sees US PPI, with markets alert to signs that energy and supply‑chain pressures are lifting upstream inflation. We also have the US NFIB small business optimism index, which will be monitored for insight into pricing power and labour costs."

"US stocks closed up and oil is currently down around 2%, or at least the screen price of Brent is, which doesn’t mean much in the physical trading space. There may be a little logic to that market optimism, driven by a majority who focus as much mental energy on ignoring bad news as a minority expend in trying to flag these kinds of major crises in advance."

"However, back-channel diplomacy continues alongside blockade(s). Indeed, Vice President Vance claims there could yet be “a grand deal,” but “the ball is in Iran’s court” - and Iran reportedly said it would only agree to suspend uranium enrichment for five years after the US had requested 20-year halt.That means there *might* be movement on the nuclear front, which could unlock much else in the negotiations."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)