The ranges
of estimates are important in terms of market reaction because when the actual
data deviates from the expectations, it creates a surprise effect. Another
important input in market’s reaction is the distribution of forecasts.

In fact,
although we can have a range of estimates, most forecasts might be clustered on
the upper bound of the range, so even if the data comes out inside the range of
estimates but on the lower bound of the range, it can still create a surprise
effect.

Distribution
of forecasts for PPI

PPI Y/Y

• 1.8%
  (4%)
• 1.7%
  (29%)
• 1.6%
  (48%) – consensus
• 1.5% (19%)

PPI M/M

• 0.2%
  (10%)
• 0.1%
  (69%) – consensus
• 0.0%
  (21%)

Core PPI Y/Y

• 2.7%
  (67%) – consensus
• 2.6%
  (28%)
• 2.5%
  (5%)

Core PPI M/M

• 0.2%
  (84%) – consensus
• 0.1%
  (14%)
• 0.0% (2%)

This article was written by Giuseppe Dellamotta at www.forexlive.com.