US dollar falls despite the rise in PPI

<p>The price action after today's PPI report might be a preview of what's to come ahead of Thursday's highly-anticipated CPI report.</p><p>The market is showing that worries about inflation have faded. The latest bump in PPI was energy-driven but since the start of October, oil prices are down and gasoline cracks have narrowed dramatically. That will translate into a decline in October PPI, so today's jump in Sept PPI was quickly faded.</p><p>The same playbook should apply to CPI.</p><p>Meanwhile, bond yields continue to retrace on geopolitical risk and that's also taking a bite out of the US dollar.</p><p>The big winner against the US dollar at the moment is the pound, which is higher for the sixth day and above 1.23 for the first time since Sept 20.</p>

This article was written by Adam Button at www.forexlive.com.