The Euro came close to breaking its annual low of March 7 ($1.0805) by retracing the 1.0810 on Tuesday and Wednesday, at the precise moment when the Producer Price Index was published.

The PPI came in at +11.2% y/y (+1.4% in March 2022, beating a consensus of +1.2%) but the core PPI jumped 1% in March 2022 (+7% y/y), against a consensus of +0.5% (after +0.4% in February).

Note the strong rise of the Canadian dollar (+0.8% to $1.2565/$) as the Central Bank of Canada raised its key rate by +50 basis points to 1% on April 13 to fight inflation: the target could be between 2 and 3% by the end of 2022 depending on the economic situation.

The Euro rebounded on the eve of the ECB meeting: This could be an opportunity for Christine Lagarde to confirm that inflation control remains the priority and that a rate hike cycle could occur as early as September, or even in July as some anticipate, which will lead to a re-evaluation of growth targets in Europe.

The Banque de France is incorporating this phenomenon into its forecasts: it is revising its growth target for the first quarter by half, from +0.5% to +0.25% (which makes the annual target of +3.6% in 2002 obsolete).

The decline of the dollar benefits gold, which is still rising (+1.3%) and has passed the $1,980/Oz mark, while silver is up by 1.5%.