U.S. producer prices likely to have risen in September

U.S. producer prices are likely to have grown in September. In the prior month, producer prices had dropped 0.1 percent; however, the underlying details had shown that the below expectations print was not as benign as the headline index had indicated. Core rate, which excludes food, energy and trade services, came in slightly weaker than anticipated, but still rose 0.1 percent in the month.

The miss was mainly due to a 0.9 percent fall in the volatile trade-services sector. More than 80 percent of the fall in prices occurred because of falling margins for machinery and equipment wholesaling, implying producers might be having a difficult time passing on rising input costs related to recent tariffs.

The index for final demand goods remained the same. While the topline reading for producer prices came in weaker than anticipated, the “core-core” measure rose 2.9 percent in the past 12 months and has maintained an upward trend.

“We expect prices to continue to gradually climb and exert further pressure on margins”, stated Wells Fargo in a research report.

At 14:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 35.6845. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex