Dollar dips as producer prices cool, euro hits one-year high By Reuters

Written by Karen Britel

NEW YORK (Reuters) – The dollar fell to a two-month low against a basket of currencies and a one-year low against the euro on Thursday after U.S. producer prices unexpectedly fell in March, boosting expectations that the Federal Reserve is nearing the end. of the rate-raising cycle.

The producer price index (PPI) for final demand fell 0.5% last month. In the 12 months through March, the producer price index increased by 2.7%. This was the smallest year-over-year rise since January 2021 and followed a 4.9% rise in February.

It comes after CPI inflation data on Wednesday came in at 5% year-on-year in March, down from 6% in February. Core inflation – which excludes volatile food and energy prices – rose to 5.6% from 5.5% in the previous month.

“We’re heading into a low-inflation world, that’s the market message right now. The next big deal is that the fear of inflation is over,” said Adam Patton, senior currency analyst at ForexLive in Toronto.

Fed fund futures traders are pricing the federal benchmark interest rate to peak at 5.01% in June, from 4.830% now, before easing back to 4.34% in December.

The next major economic release from the US will be retail sales on Friday, which will be analyzed to see how inflation affects consumer spending.

Other data on Thursday showed that the number of Americans filing new claims for unemployment benefits rose more than expected last week, in another sign that labor market conditions are softening as higher borrowing costs dampen demand in the economy.

The euro fell to 100.84, the lowest level since February 2, and the euro reached $1.10680, the highest level since April 1, 2022.

The single currency is supported by the relatively more hawkish European Central Bank which is expected to continue to raise interest rates to tackle inflation.

“We have seen a significant swing in interest spreads in favor of the euro,” said Ben Laidler, global markets analyst at eToro.

“A combination of low US inflation and rising recessionary risks has raised expectations of three Fed rate cuts this year compared to more hikes from the still-hawkish European Central Bank.”

Governing Council member Bostjan Vasli said on Thursday that the European Central Bank needs to continue to raise interest rates given high core inflation, and its next move could be either a 25 or 50 basis point increase.

ECB policy maker Joachim Nagel also said core inflation rates in the eurozone will start to improve in the coming months, but the ECB still has a way to pursue monetary policy.

The dollar fell 0.32% against the yen, to 132.77. The dollar, which is sensitive to risk appetite, reached $0.67965, up about 1.4% on the day, the highest since February 24.

Australian employment blew previous expectations for a second month in March while the unemployment rate held near a 50-year low, a strong and unequivocal report that suggests the central bank’s tightening campaign may not be over yet.

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The currency bid prices at 3:00 pm (1900 GMT)

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

previous change

a class

Dollar Index 101.0000101.4800 -0.45% -2.406% +101.6000 +100.8400

EUR/USD 1.1046 USD 1.0991 + 0.52% + 3.11% + 1.1068 USD + 1.0977 USD

USD/JPY 132.7700 133.1950 -0.32% + 1.27% +133.3850 +132.0250

EUR/JPY 146.65 146.33 +0.22% +4.54% +146.8800 +146.0900

USD/CHF 0.8881 0.8964 -0.90% -3.94% +0.8974 +0.8860

GBP/USD 1.2523 USD 1.2485 USD + 0.30% + 3.55% + 1.2537 USD + 1.2478 USD

USD/CAD 1.3337 1.3440 -0.76% -1.56% +1.3448 +1.3335

AUD/USD 0.6788 USD 0.6694 +1.42% -0.40% + 0.6797 USD + 0.6687 USD

EUR/CHF 0.9810 0.9850 -0.41% -0.86% +0.9858 +0.9800

EUR/GBP 0.8819 0.8802 +0.19% -0.28% +0.8838 +0.8793

NZD 0.6305 + 0.6216 + 1.45% -0.69% + NZD 0.6315 + $0.6204

dollars / dollars

Dollar / Norway 10.2950 10.4280 -1.32% +4.85% +10.4470 +10.2900

Euro / Norway 11.3760 11.4740 -0.85% +8.41% +11.4880 +11.3640

Dollar / Sweden 10.2638 10.3505 -0.24% -1.38% +10.3578 +10.2503

Euro / Sweden 11.3411 11.3679 -0.24% +1.72% +11.4044 +11.3360