The most popular inflation reports for the U.S. economy appear on a regular monthly basis. These reports include:
• PPI: Producer Price Index.
• CPI: Consumer Price Index.
• ISM: Institute Supply Management index.
• Retail sales.
• Durable goods orders.
• NFP: Nonfarm payrolls.
• GDP: Gross Domestic Product.
Any one announcement is usually not that important in the long run. However, it’s the trend that is important and how many of the different announcements agree.
For example, if we see inflation rising in most of the monthly reports over a series of several months, we may develop a bias for that currency as we assume the central bank is considering an interest rate hike to combat the inflation. Higher interest rates will attract more investors, create demand for the currency, and the valuation of the currency will likely rise.
Producer Price Index—PPI
The Producer Price Index is a collection of indices that measure price changes from the producer’s perspective and how the producer’s cost of materials may be passed over to the consumer. PPI covers three areas of the production process: industry-based, commodity-based, and stage-of-processing-based companies.
PPI is a good indication of potential increase in inflation. If producers are having to pay higher prices for their materials, then there is more likelihood that some of those increased costs will be passed on to the consumer, which in turn can affect CPI.
Recent PPI response per currency ...