The latest producer prices data surprised to the upside in January. Data from the Labor Department showed that producer prices rose 0.5% in January. This comes after a 0.2% increase in December. The gains came despite a 0.7% decline in energy prices. Excluding food and energy, the core PPI was up 0.5% for the period.
December Eurozone Construction Output Falls
Weak economic data continues to plague the eurozone. The latest construction reports show that activity declined in December. The construction output fell 3.1% on a month over month basis in December. This follows a 0.7% increase in the prior month. The weak construction data remains consistent with other economic reports for the month.
Downside Bias Alive in EURUSD
The common currency continues to remain weak, albeit showing some signs of slowing momentum. Price action currently is consolidating right at the trend line with some downside bias in place. The Stochastics oscillator is also rather flat despite staying close to the oversold levels. Any correction will see a retest of 1.0839 in the near term.
UK’s January Inflation Hits a Six-Month High
The latest inflation statistics from the UK’s Office for National Statistics (ONS) showed that consumer prices rose sharply in January. Headline inflation rose to a six-month high, rising 1.8% on the year. This comes after a tame inflation reading of 1.3% in the prior month. The gains came on the back of higher oil prices.
GBPUSD Unimpressed by Higher Inflation Report
The pound sterling brushed aside the higher inflation report and is trading weaker on the day. The declines are pushing GBPUSD back below the support area of 1.2960. But the declines might be short-lived for the moment. With the Stochastics likely to form a bullish divergence, there is scope for a rebound.
EIA Forecasts Lower Oil Demand in 2020
The US Energy Information Administration forecasts that demand for crude oil could drop as much as 378,000 barrels per day this year. EIA’s forecasts follow that of OPEC from a week ago. OPEC members also cut oil forecasts as they expect demand to fall by 230,000 barrels per day. Crude oil prices are however brushing aside this data.
WTI Crude Oil Correction Underway
Oil prices are rising steadily following a weak spell. After breaking past the resistance level of 51.65, price action is steady as WTI targets the 54.75 level. In the near term, there is scope for a pullback. But the declines might be limited to the 51.65 level for support to establish firmly.