Forex News: U.S. Dollar Weakens Despite Hot PPI Data

U.S. Dollar Weakens Despite Hot PPI Data

(RTTNews) - The U.S. dollar declined against its major counterparts in the New York session on Friday, despite data showing a higher-than-expected increase in producer prices in June.

The Labor Department said its producer price index for final demand rose by 0.2 percent in June following a revised unchanged reading in May.

Economists had expected producer prices to inch up by 0.1 percent compared to the 0.2 percent dip originally reported for the previous month.

The report also said the annual rate of producer price growth accelerated to 2.6 percent in June from an upwardly revised 2.4 percent in May.

The annual rate of producer price growth was expected to creep up to 2.3 percent from the 2.2 percent originally reported for the previous month.

Thursday's lower-than-expected CPI reading intensified expectations for a rate cut as early as September.

San Francisco Fed president Mary Daly on Thursday said she expects further easing in both price pressures and the labor market, and therefore some policy adjustment will be warranted.

Chicago Fed President Austan Goolsbee described the latest inflation data as "excellent," adding the reports prove that the central bank is on track to meet its 2 percent target.

The greenback fell to more than a 3-week low of 157.35 against the yen, more than 5-week low of 1.0910 against the euro and near a 1-year low of 1.2988 against the pound, off its early highs of 159.44, 1.0861 and 1.2901, respectively. The greenback is seen finding support around 147.00 against the yen, 1.10 against the euro and 1.31 against the pound.

The greenback dropped to 0.6792 against the aussie and 0.6124 against the kiwi, from an early high of 0.6753 and a 2-day high of 0.6076, respectively. The greenback is likely to challenge support around 0.69 against the aussie and 0.63 against the kiwi.

The greenback eased against the loonie and was trading at 1.3617. The currency is poised to challenge support around the 1.33 level.

Against the franc, the greenback reached as low as 0.8932. If the greenback falls further, it is likely to test support around the 0.88 region.

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