U.S. producer prices rise above expectations in March

U.S. producer prices came in stronger than expectations in March. On a sequential basis, producer prices rose 0.6 percent, as compared with consensus expectations of a rise of 0.3 percent. The headline rate was driven by a surge in energy prices and a modest recovery in food PPI.

Excluding food and energy, the core PPI rose 0.3 percent on a sequential basis, driven by a recovery in the volatile trade margins category. However, core PPI, excluding trade margins, came in flat on the month, which implies that price pressures at the core level continue to be relatively subdued. However, pipeline pressures are expected to firm gradually in the remainder of this year, led by higher capacity utilization, noted Barclays in a research report.

In the meantime, personal consumption PPI, the BLS series that tracks pipeline price pressures for CPI inflation, rose strongly by 0.7 percent sequentially and 2.1 percent year-on-year. Stripping food and energy, personal consumption PPI rose 0.4 percent sequentially and 2.4 percent year-on-year. Core PPI for personal consumption also seems to be driven by strength in the trade category, and excluding that, core PPI came in flat on the month.

At 14:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -40.6945 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex