Markets are favouring Risk On again, forgetting about the inflation hiccup from Tuesday.
The US Dollar Index could further dip below 104 if PPI confirms further easing ahead.
The US Dollar (USD) is telling two stories this week with, on the one hand, the recent uptick in inflation had hit a nerve in markets with a firm risk-off reaction on Tuesday. Though, the Retail Sales from Thursday show that dynamics for customers are changing with a substantial drop in numbers and the downward revision made traders completely write off the inflation report from Tuesday as a one off. This puts the US Dollar Index (DXY) flat to the same level where it opened on Monday with just one trading session left to look for direction.
On the economic data front, the decision on where the US Dollar will be heading, will be taken on the back of two key data points this Friday: The Producer Price Index elements and the University of Michigan print. These two elements will define the outcome for this week, with overall expectations to see further easing in the price pressure and a softer US Dollar on the back of that
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