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US dollar steadies as US PPI softens and yields rise
Danske Bank flagged a move toward higher policy rates, after a 30-year Treasury auction pushed long-term borrowing costs to their highest level since 2001.
The US dollar saw a mixed backdrop as July producer price inflation came in slightly below expectations, while investors also focused on the path for US rates, according to commentary shared by Danske Bank’s Danske Research Team via FXStreet.
Danske said the US July PPI print was 4.7% year on year versus 4.9% expected, with volatile trade and transport services weighing on the headline, while broader services price pressures remained firmer. FXStreet also noted that jobless claims released alongside the data were mixed, and that the market reaction to the overall package was muted.
The broader rates picture, meanwhile, turned more hawkish, with Danske Bank pointing to higher long-term borrowing costs after a 30-year Treasury auction. Long-term borrowing costs rose to their highest level since 2001 at a USD 25 billion auction, reflecting concerns about federal debt and persistent inflation, and Danske cited Fed official Hammack reiterating support for higher policy rates to curb inflation.
Looking ahead, the note highlighted the upcoming release of US retail sales and additional sentiment signals, including the University of Michigan’s August flash consumer sentiment survey, as potential inputs to late-summer growth and inflation expectations.