THE TAKEAWAY: [U.S. producer prices rose in June for first time in four months] > [Contained price pressures likely to boost company growth activity] > [USDJPY strengthens]
Wholesale prices in the U.S. unexpectedly rose in June for the first time in four months, led by an increase in the cost of food. The U.S. Bureau of Labor Statistics (BLS) released a report today that revealed that producer prices rose 0.1 percent in June from a month ago, following a 1.0 percent drop the month before. The consensus estimate of 70 economists surveyed by Bloomberg News had called for a 0.4 percent decline. The core index, which excludes the volatility of food and energy costs, increased 0.2 percent from a month earlier, in line with expectations. Compared to the same month a year earlier, wholesale prices rose 0.7 percent in June, while the core index increased 2.6 percent.
Price pressures for U.S. producers remain contained as the slowdown in overseas economies continues to restrain commodity and oil prices. The lower expenses and drop in energy prices are likely to help boost the U.S. economy, as companies have more money to spend on growth activities.
USDJPY 1-minute Chart: July 13, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the minutes after the BLS report was released, the U.S. dollar strengthened against the Japanese yen. At the time of this report was written, the USDJPY pair continued to trade higher despite a slight pullback, and was trading at 79.28 yen.
--- Written by Tzu-Wen Chen, DailyFX Research