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.
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.
The same playbook should apply to CPI.
Meanwhile, bond yields continue to retrace on geopolitical risk and that's also taking a bite out of the US dollar.
US 10 year yields
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.
