Loonie drops amid US PPI data release

Key Movers

The US Dollar Index (DXY) was up this morning as the USD regained losses seen yesterday against other major currencies. The key driver of the rebound was this morning’s release of January’s PPI data. The release showed that prices paid by manufacturers last month were up 0.3% versus an expected 0.1% bump. The more focused Core release, which strips out more volatile items, was up 0.5% compared to the anticipated 0.1% rise. This was seen as a long-term predictor of consumer price inflation because higher prices in the production channel will bleed through to the end user. Still to come today, the monthly University of Michigan Consumer Sentiment is set to be released, which is expected to be up to 80 on the index from 79 in January.

The euro joined other majors in trimming off against the USD this morning as the greenback gained on PPI data. One possible positive for the Eurozone came out overnight as inflation in France slowed more than expected. Prices in the second biggest European economy were up 3.1% year-over-year in January, lower than the 3.7% in December.

The GBP was also down against the USD. This dip comes even though UK retail sales last month were stronger than expected, showing a bump of 0.7% versus a predicted drop of -1.6%.