NEW YORK: The dollar slipped against major currencies on Wednesday after softer-than-expected US producer prices reinforced signs of easing inflation, bolstering the view that the Federal Reserve can remain patient on interest rates even as investors weighed renewed strikes on Iran.
The Producer Price Index for final demand dropped 0.3 percent in June after a downwardly revised 0.6 percent increase in May, the Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the PPI unchanged after a previously reported 1.1 percent advance in May. The dollar was flat against the yen at 162.19 yen. The euro steadied at USD1.1433, while sterling rose 0.44 percent to USD1.3447. The US dollar index, which tracks the currency against six major peers, softened 0.09 percent to 100.79. It fell 0.4 percent in the previous session, its biggest decline in nearly two weeks, after touching its highest level since July 2.
“Today’s PPI numbers further solidify the idea that the Federal Reserve can afford to wait until they increase borrowing costs again,” said Juan Perez, director of trading at Monex USA. Meanwhile, New York Fed President John Williams said inflation remains “unquestionably too high” but may have peaked and should begin easing, adding that monetary policy is well positioned to guide it back to target.
The dollar has tended to benefit during flare-ups in the conflict because of its safe-haven status and the relatively limited impact of higher energy prices on the US economy compared with some peers. Cooler US inflation had earlier weighed on the dollar. US consumer inflation slowed more than expected to 3.5 percent on a year-on-year basis in June, data showed on Tuesday.
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