How to Use PPI in Foreign Exchange Trading?

 

Due to its signaling impact on anticipated future inflation, PPI is a significant piece of economic data. Due to the strong correlation between inflation and interest rates, traders in the forex market keep an eye on PPI. However, their primary worry is the potential impact of changing interest rates on currency pairings. Learn more about the PPI index and its effect on the foreign currency market.

WHAT IS PPI, AND WHAT IS MEASURED BY IT?

The Producer Price Index, or PPI, tracks changes in the cost of completed products and services that producers sell to consumers. The average price of a basket of items bought by manufacturers is represented by PPI data each month.

How is the PPI determined?

Commodity-based, industrial-based, and stage-of-processing-based enterprises are the three production sectors that PPI analyses. PPI is developed using data from a postal survey of merchants chosen by systematically sampling all businesses registered with the Unemployment Insurance System, and the Bureau of Labor Statistics publishes it.

 

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