Release Explanation: The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. This includes the rate of inflation at the factory gate. When manufacturers pay more for goods and services, they are likely to pass the higher prices to consumers.
Trade Desk Thoughts: In January, the German PPI was released at -1.2%, much higher than the market’s expectations. However, the year-over-year read has fallen to 2.0%. The largest upward pressure came from energy products in the prior months, but now this trend seems to be reversing, dragging the whole index lower.
Forex Technical Reaction: The Euro had a weak response to the release. Since the Asian session started, the pair shed 70 pips and is trading near the low of the last day of trading.