Tuesday, 17 Nov 2009

Impending Economic Indicators Bad News for the Dollar

With the greenback rebounding slightly following Fed Chairman Bernanke's speech yesterday, all eyes are currently on the impending release of the U.S. Producer Price Index (PPI). Scheduled for 13:30 GMT, the PPI indicates the price of goods before they reach store shelves. With the number forecasted to rise 0.6%, and the core PPI (which excludes food and energy prices), expected to rise only 0.1%, the Fed should be able to limit inflation for the time being. As a result, traders can expect U.S Interest Rates to remain at their record low rates, leaving the dollar in a continued slump.

In another sign of the dollar's health, the Federal Reserve is scheduled to release data on the rate of industrial production at 14:15 GMT. With the number expected to rise only 0.4%, compared to last months increase of 0.7%, traders can take this as further indication of the slow pace of the economic recovery. The dollar will likely stay low as a result of this number. If the industrial production number should defy predictions and land above 0.7%, the dollar could increase in short term trading.