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Dollar slips after weaker-than-expected US PPI tempers Fed hike odds
US June PPI rose 5.5% year over year, and currency swaps put the odds of a 25 bp Fed hike at 12% for the July 28-29 meeting.
The dollar index (DXY00) fell 0.1% as US June producer prices came in weaker than expected, a development that lowered expectations for a near term Fed rate hike, according to Yahoo Finance.
US PPI for final demand eased to 5.5% year over year from 6.0%, below forecasts of 6.2%. Ex food and energy, June PPI rose 4.7% year over year, also weaker than the 5.1% expected, while the July Empire manufacturing survey’s general business conditions reading increased to 15.6 from 9.9.
Investors also weighed mixed macro signals, with swaps markets discounting a 12% chance of a 25 bp Fed increase at the next FOMC meeting on July 28-29. The dollar’s losses were described as limited despite safe haven demand, as US forces carried out airstrikes against Iran for a fifth day and Iran responded with missile and drone attacks against Kuwait.
Against major peers, EUR/USD rose 0.1% as the weaker US data supported the euro. The German 10 year Bund yield reached a 1.75 month high of 3.148%, while Eurozone May industrial production unexpectedly declined 0.2% month over month.
Latest closeEUR/USD 1.138 ▼0.6%|Dollar index 101.29 ▲0.2%