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Euro-area PPI Drops 1.9% In Dec, The Most On Record

Jan 7 09 5:18 EST (LFB Forex)
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Release Explanation: The PPI measures the rate of inflation of manufacturers when purchasing Goods and Services; the rate of Inflation at the factory Gate. An increase in the price of raw Goods and services usually gets passed on to the consumer, therefore this is the first stage on Retail Inflation.

Trade Desk Thoughts: The Euro-area PPI shows that the pace of inflation is starting to slow at a strong pace. Producer prices dropped a record 1.9% in November, more than analysts had predicted. The number released for the month of October was left unrevised.

The PPI read, excluding the energy sector, fell by 0.8% in November, much more than in the previous months. The energy component alone fell in November a whopping 5.1%, the most on record. The year over year PPI read stands at 3.3%, even though earlier this year, in July, it peaked at 9.2%.

Forex Technical Reaction: The euro was unmoved by the release. Currently, the pair is struggling to break above the 100-day moving average, after gaining 100 pips overnight.

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