NEWS / Foreign Exchange

This morning's big economic data out of the U.S. includes the U.S. Trade Balance and the PPI.

Overnight, Euro-zone industrial production rose more than expected in February by 0.6 percent month-over-month, but there was also a downward revision to the monthly change in January. As a result, the year-over-year change in IP came in as expected at 4.1 percent. This is still strong growth for the European industrial sectors and caused EUR to strengthen on the back of this data. The EUR is just a stone's throw from testing its all time high.

This morning's big economic data out of the U.S. includes the U.S. Trade Balance and the PPI. After the whopping rise in import prices yesterday, there are significant upside risks to producer prices today. If, indeed, we do see very strong producer inflation, this could potentially push yields of Treasuries up and strengthen the dollar. At the same time, if the trade deficit significantly deviates from the consensus estimate of $60.0 billion, it, too, could push the greenback. Given the Fed's recent minutes, which highlighted inflation as the "predominant policy concern" of the FOMC, the PPI is likely to be more critically watched for its implications vis-? -vis the CPI out next week.

The Canadian trade balance data is also out at 8:30 and is expected to have weakened in February from the January level of C$6.4 billion. A much stronger figure could allow CAD to continue to strengthen, as it has so sharply done in recent weeks. If it is weaker, there may be a slight correction resulting in some CAD weakness.