News Trader - US Producer Price Index

Trading the News: US Producer Price Index

What is Expected
Time of release: 08:30 EST, 12:30 GMT 4/13/2007
Primary Pair Impact : EUR/USD
Expected: 0.7%
Previous: 1.3%

How to Trade This?

The US Producer Price Index report has been fairly uneventful through the past three releases, providing only one post-news trade within this small time frame. Indeed, it may continue to disappoint if there is no significant surprise in the headline results. Given median forecasts of an unchanged 1.8 percent Core PPI, the dollar may have a difficult time rallying on the data.

With overall bullish momentum clearly favoring EURUSD gains, it seems that Core PPI may have to move above 2.0 percent to produce a material dollar move. If markets do indeed react to the news, be prepared to go short the EURUSD on the close of a red five-minute candle at 12:35 GMT (08:35 EST). The psychologically significant 1.3500 mark severs as immediate support, while previous resistance at 1.3450 may provide a firm price floor through short-term price action.

A soft PPI print may simply add to EURUSD gains, with seemingly little in the way of further Euro appreciation. If the Core year-over-year rate prings considrably below expectations of 1.8 percent, the trader may want to go long the EURUSD on confirmation of an initial bullish move. If the first five minute candle is green with little sign of potential reversal, the trader may go long with a stop below previous swing lows. The 1.3550 mark serves as relatively insignificant resistance, with the true aim to head for record-highs above 1.3600.

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