If the [Actual] value is greater than the [Forecast] value, it is good, or bullish, for the currency. (USD) A strong or bullish currency will tend to increase vs. other currencies while a weak or bearish currency will tend to decline against other currencies.
Source: Bureau of Labor statistics, Department of Labor
Description: The PPI measures the changes in the selling prices for goods and services. Since producers pass increased cost to the consumer via higher prices, changes in producer prices are an early indicator of inflationary pressures. A rising PPI may be the predecessor of higher interest rates as the Fed may try to tame the rate of inflation. The headline is given as a percentage change in the producer price. There is a month to month and a year to year comparison of these reports. Ironic outcome indicator: intuitively and logically, higher-than-expected inflation is worse for the dollar, because higher inflation rates decrease the demand for investments (and the currency denominated in them) because all or part of any expected asset yields can be erased by the level of inflation. However, speculators tend to imagine that if the fed sees a higher inflation number that is moving beyond acceptable levels, it will be more likely to raise interest rates to counter it, and so they may speculate in a stronger dollar in anticipation of an increase in interest rates that may or may not actually happen. Conversely, a lower-than-expected inflation rate would be seen as a non-threat to the central bankers, enabling them to focus on spurring the economy by lowering interest rates, which in turn depreciates the dollar.
Acronyms, if any: PPI - Producer Price Index
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