Eurozone Producer Prices were released today, higher than expected and up in April, to keep Euro elevated on expectations of a rate hike in July.
On a month-to month basis, the industrial producer price index prices rose by 0.9% in April 2011 compared with 0.7% in March 2011 in the Eurozone area. This was much better than economists had predicted only a 0.8% rise.
On a year to year basis, in April 2011 compared with last year in April 2010, industrial producer prices remained unchanged at 6.7%. The forecast was actually for a decrease to 6.7%.
The data are compiled by the official European Union statistics office, Eurostat, and measures the change in the price of finished goods and services sold by producers. The data tends to have a muted impact because Germany and France, which account for about half of the Eurozone’s economy, release their PPI data earlier.
The data shows that pipeline inflation pressures remain but with the European Central Bank focused on headline inflation the data reinforces the view of further ECB rate hikes. The ECB will be meeting later this week so the markets will focus on any hawkish comments that will signal a rate hike as early as July as well as to keep ECB liquidity operations at full allotment.
Upon the release of the data at 09:00GMT, the Euro rose 17 pips against the US Dollar, from 1.4634 to 1.4651 within 8 minutes.