NEW YORK: The dollar fell on Thursday after data showed producer prices were unchanged in July, coming after Wednesday’s consumer price inflation report that showed that US consumer prices barely increased last month.
The flat reading in the Producer Price Index for final demand last month followed a revised 0.1 percent drop in June. Economists polled by Reuters had forecast the PPI rebounding 0.2 percent.
The soft data led traders to further pare back expectations of a Federal Reserve rate hike in September. Fed funds futures now show a 31 percent probability of a September hike, down from 40 percent on Wednesday and 55 percent a week earlier.
Noel Dixon, senior macro strategist at State Street, said the components of Thursday’s report that feed into the personal consumption expenditures data due later this month suggest that the report “should be pretty good.”
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.07 percent to 99.88, with the euro up 0.1 percent at USD1.1536.
Oil prices declined on Thursday as investors assessed prospects for weaker global demand this year and higher US crude stocks.
Other data on Thursday showed that the number of Americans filing claims for unemployment benefits increased moderately last week, suggesting that the labor market remains stable despite July’s surprise job losses.
The Japanese yen strengthened 0.14 percent to 159.19 per dollar.
The pound strengthened 0.08 percent to USD1.3503. The UK economy unexpectedly grew in June, thanks to a dip in energy prices, along with the start of the men’s soccer World Cup and hot weather.
The Norwegian crown weakened after Norges Bank left interest rates unchanged, as expected, while flagging that inflation had softened recently. At 4.25 percent, Norway holds one of the highest interest rates among the 10 most developed economies, and its status as an oil and gas exporter has given the crown a boost this year. Against the Norwegian krone, the dollar strengthened 0.34 percent to 9.515.
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