Yahoo Finance U.S. Dollar Higher on Positive Economic Data, Euro Weakness
Investing.com – The dollar rose Wednesday as data showing U.S. wholesale prices increased at a faster pace than anticipated last month raised investor expectations for stronger inflation, increasing the prospect of further Fed rate hikes.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.36% to 94.19.
The Labor Department said on Wednesday its producer price index for final demand increased 0.3% last month.
In the 12 months through June, the PPI rose 3.4% after rising 3.1% in May. This was the biggest annual increase in 6-1/2 years, stoking expectations the Fed could adopt a more aggressive stance on monetary policy tightening to rein in inflation.
Euro weakness also pushed the greenback higher, as the single currency pared gains which followed a report ECB members were split over when to raise rates.
Some policymakers said an increase was possible as early as July 2019, while others suggested a move was unlikely until autumn next year, Reuters reported Wednesday, citing sources.
EUR/USD fell 0.33% to $1.71705.
The return of U.S.-China trade war jitters, meanwhile, did little to lift safe-haven currencies as both the yen and Swiss franc were under pressure against the greenback.
USD/JPY rose 0.83% to Y111.91, while USD/CHF rose 0.30% to 0.9923.
The White House issued a list late Tuesday of 10% tariffs on $200 billion worth of Chinese imports it will assess.
USD/CAD rose 0.26% to C$1.3148 after Bank of Canada raised interest rates Wednesday, and said it expected GDP to come in at 2.8% for the year.
But analysts said the 2.8% year-end GDP target was somewhat optimistic, and suggested that the loonie would continue to weaken.
"As things stand today, the 2.8% predicted growth for 2018 Q2 looks a touch optimistic … We remain biased for USD/CAD to re-test its 2018 highs in the coming weeks and months," TD Securities said in a note to clients.
GBP/USD fell 0.42% to $1.3220.
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