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Dollar mixed as flat July PPI cools odds of September Fed hike
Fed funds futures put the probability of a September hike at 35%, down from 40% Wednesday and 55% a week earlier.
The US dollar traded mixed on Thursday after producer prices showed no increase in July, prompting traders to dial back expectations for a September Federal Reserve rate hike. The Producer Price Index for final demand was unchanged, following a revised 0.1% decline in June, and came in below the 0.2% rebound forecast in a Reuters poll of economists.
Reuters reported that traders were also reacting to the prior day’s consumer inflation data, which showed US consumer prices barely increased last month. One analyst cited by Reuters said the combination of the PPI and CPI readings supported the case for the Fed to stay on hold in September.
As the data shifted rate expectations, Fed funds futures indicated a 35% chance of a September hike, down from 40% on Wednesday and 55% a week earlier. The dollar index rose 0.02% to 99.96 after earlier slipping to 99.80 following the PPI release.
In currency moves tied to the broader rate outlook and global risk signals, the euro was up 0.03% to $1.1528, while the Japanese yen weakened 0.04% to 159.48 per dollar. Reuters also noted that markets are monitoring further inflation persistence, energy price pressure, and recent Iran-related disruption concerns, along with incoming US retail sales and unemployment claims data.
Latest closeDollar index 99.99 ▲0.2%