U.S. Dollar Down As Producer Inflation Drops Before Fed Announcement
June 14 2023 - 8:20AM
RTTF2
The U.S. dollar fell against its major counterparts in the New
York session on Wednesday, as the nation's producer prices
decreased more than expected in May, cementing hopes of a rate
pause by the Federal Reserve when it announces its monetary policy
decision later in the day.
Data from the Labor Department showed that the producer price
index fell by 0.3 percent in May after inching up by 0.2 percent in
April. Economists had expected producer prices to edge down by 0.1
percent.
The report also showed the annual rate of producer price growth
slowed to 1.1 percent in May from 2.3 percent in April. The rate of
growth was expected to decelerate to 1.5 percent.
Investors focus on the Fed's monetary policy decision, due out
at 2:00 pm ET.
While the Fed is widely expected to leave interest rates
unchanged, traders will pay close attention to the accompanying
statement for clues about the outlook for rates.
The greenback fell to more than a 1-year low of 1.2692 against
the pound and more than a 3-week low of 0.8969 against the franc,
off its early highs of 1.2600 and 0.9060, respectively. The next
possible support for the currency is seen around 1.30 against the
pound and 0.88 against the franc.
The greenback weakened to near a 4-week low of 1.0844 against
the euro and more than a 4-month low of 1.3275 against the loonie,
from its early highs of 1.0773 and 1.3319, respectively. The
greenback is likely to find support around 1.10 against the euro
and 1.30 against the loonie.
The greenback fell to near a 4-month low of 0.6832 against the
aussie and a 3-week low of 0.6225 against the kiwi, reversing from
its early highs of 0.6762 and 0.6142, respectively. The currency
may locate support around 0.71 against the aussie and 0.645 against
the kiwi.
The greenback was down against the yen, at 139.40. If the
currency falls further, 134.00 is likely seen as its next support
level.
At 2:00 pm ET, the Fed announces its decision on interest rate.
Economists widely expect the Fed to hold the policy rate steady at
5.00 percent to 5.25 percent.
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