Australian Producer Price Index

Australian Producer Price Index Actual -0.4%, Expected 0.6%, Previous 1.3%

Release Explanation: Producers tend to pass on higher costs to consumers as higher retail prices, thus the PPI is valuable as an early indicator of inflation. “Inflation reflects a decline in the purchasing power of a country's currency, where each dollar buys fewer goods and services”, TheLFB-Forex.com Trade Team members said. The report also gives insight into how higher prices from raw materials flow through intermediaries toward the final product.

Trade Desk Thoughts: Producer prices in Australia decreased by 0.4% percent in the first quarter of 2009. This was mainly due to price decreases in the building construction (-1.6%), petroleum refining (-8.9%) and dairy product manufacturing (-4.9%). This was partially offset by price increase seen in industrial machinery and equipment manufacturing (+5.4%) and tobacco product manufacturing (+12.8%). Overall, the year through March of 2009 the index increased by 4.0%.

Forex Technical Reaction: The Australian dollar has weakened since the start of the new trading week and is weakening further since the release. The pair has lost 85 pips since the start of the Asian session and if U.S. futures continue to weaken the pair may continue to move lower.

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