• Headline PPI rose at 9.7% YoY in January, unchanged from December and significantly above expected.
• Core PPI metrics were also hotter than expected, though the YoY rate fell versus December, prompting some modest USD weakness.  

The headline US Producer Price Index (PPI) rose at an annual pace of 9.7% in January, according to the latest report from the US Bureau of Labor Statistics on Tuesday. That was well above the median economist forecast for 9.1% and was unchanged versus December's 9.7% reading. MoM, PPI came in at 1.0% in January, well above expectations for a 0.5% MoM gain. Core PPI metrics were also significantly hotter than expected, with the YoY rate falling less than expected to 8.3% in January from 8.5% the month prior against forecasts for a decline to 7.9% and the MoM rate rising to 0.8% from 0.6% in December, well above the expected 0.5% gain. 

Market Reaction

Despite the much hotter than expected PPI metrics, the fact that the YoY rate of core PPI fell versus January levels seems to be weighing a tad on the US dollar. The DXY recently dipped to fresh session lows under 96.00.