FOREX ECONOMIC INDICATOR:PRODUCER PRICE INDEX (PPI)

Producer Price Index (PPI) is an economic indicator that measures the price changes from the perspective of seller. According to the wikipedia.com,"A Producer Price Index (PPI) measures the average changes in prices received by domestic producers for their output." Consumer Price Index (CPI) is another price index that measures the price changes from the perspective of consumers.

Source:apparelnetwork.it

In forex fundamental analysis, producer price index is an important economic indicator because it helps to predict the consumer price index. We already know that the price indices explains the inflation in the economy, and inflation is the key to interest rate expectation. 

PPI indicates the trends within the wholesale markets,manufacturing industries and commodities markets. It does not include the imported products. 

Forex traders should keep close watch on the PPI data release because after PPI data release, forex market can have a big move. Even PPI data is important to understand the market directions before the CPI data release. 

Some times you can see that market takes the direction within 12-26 hours prior to the CPI data release.Core Producer Price Index is the PPI excluded the most volatile food and energy items. Core PPI is more accurate than the PPI.

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