Dollar strength builds as markets brace for US producer price data

Frank Walbaum

Important news this week

Fri, 13th, 14:30 CET US Producer Price Index.

Dollar strength builds as markets brace for US producer price data

The US Dollar continues to strengthen, with the Dollar Index climbing above 103 and extending its recent rally. Expectations of further monetary tightening by the Federal Reserve are supporting the greenback, particularly after this week's stronger inflation figures increased speculation about another rate hike in December. Today's US Producer Price Index (PPI) release could provide another important test for markets. A stronger-than-expected reading would reinforce concerns about persistent inflation and potentially push yields and the dollar even higher, while a softer number could trigger some profit-taking.
The pressure is becoming increasingly visible across major currency pairs. AUDUSD has weakened further and is now trading well below the 0.6800 area, reflecting deteriorating risk sentiment. The euro also remains vulnerable, while the broader dollar advance continues to challenge attempts at a recovery across major currencies. Traders will be watching the PPI figures closely, as the inflation outlook and changing Fed expectations remain the main drivers of near-term FX direction.

Metals and crypto extend losses as Nvidia shock weighs on risk appetite

Precious metals remain under pressure as the stronger dollar and rising yields continue to undermine demand. Silver is holding up slightly better than gold on a relative basis, but both markets remain technically weak. Equity futures are also pointing slightly lower ahead of the US session, with the S&P 500 and Nasdaq facing renewed uncertainty after Nvidia shares came under heavy selling pressure. Jensen Huang's resignation as CEO, following reports that triggered a major corporate crisis, has sent shockwaves through the technology sector. CFO Colette Kress has been appointed interim CEO, but the leadership transition raises questions about the company's future direction and the wider AI investment theme.

Cryptocurrencies are also struggling to find support. Bitcoin has fallen below $70,000, while Ethereum and most major altcoins are extending their declines. Institutional outflows from spot Bitcoin ETFs, tightening liquidity and substantial liquidations of leveraged long positions are adding to the selling pressure. With risk appetite deteriorating and the dollar strengthening, further downside cannot be ruled out. A test of the $50,000 area for Bitcoin remains a more distant bearish scenario rather than an immediate target, but continued weakness could bring lower support levels into focus. Today's PPI release may therefore prove important not only for currencies and metals, but also for the broader risk environment.

AUD/USD: we sold at 0.6845 with SL at 0.6950 and TP at 0.6685.

Tendencies in the markets

Equities sideways, USD strong, crypto weak, oil positive, metals weak, JPY mixed.

Markets in focus

SP500-s (focus for the day: s=short / l=long).

Author

Frank Walbaum

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