WASHINGTON (dpa-AFX) - Despite data showing a bigger than expected increase in U.S. Producer Price Index, the U.S. dollar fell on Friday, extending recent losses, on rising prospects of an interest rate cut by the Federal Reserve amid signs of cooling consumer price inflation.
A report from the Labor Department said its producer price index for final demand rose by 0.2% in June following a revised unchanged reading in May. Economists had expected producer prices to inch up by 0.1% compared to the 0.2% dip originally reported for the previous month.
The report also said the annual rate of producer price growth accelerated to 2.6% in June from an upwardly revised 2.4% in May. The annual rate of producer price growth was expected to creep up to 2.3% from the 2.2% originally reported for the previous month.
The Labor Department's data on Wednesday said U.S. consumer price index slipped by 0.1% in June after coming in unchanged in May. Economists had expected consumer prices to inch up by 0.1%.
The report also said the annual rate of consumer price growth slowed to 3% in June from 3.3% in May. Economists had expected the pace of price growth to decelerate to 3.1%. The annual rate of core consumer price growth also slowed to 3.3% in June from 3.4% in May. The pace of growth was expected to remain unchanged.
The dollar index dropped to 104.04, down nearly 0.4% from the previous close.
Against the Euro, the dollar weakened to 1.0909 from 1.0869, and against Pound Sterling, it fell more than 0.5% to 1.2986.
The dollar was down against the Japanese currency at 157.91 yen. The Aussie firmed against the U.S. dollar, fetching 0.6784 a unit.
Against Swiss franc, the dollar weakened to CHF 0.8944. The Loonie edged down marginally to 1.3637 a unit of the American currency.
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