Dollar Mixed After US PPI Data

The U.S. dollar was mixed against other major currencies on Wednesday, following the release of disappointing data on producer prices in the United States.

Lower costs for energy pushed the U.S. producer price index to a drop of 0.6% in February, the Labor Department reported Wednesday. Analysts surveyed by MarketWatch had predicted a decrease of 0.3% for the month. Core producer prices, excluding volatile food and energy, rose 0.1%. Economists had been anticipating a decline of 0.1%. February's decline in the headline PPI was the largest since a fall of 1.2% last July. In January, the PPI rate had jumped 1.4%, while the core rate had risen 0.3%.

The USD made another new low overnight and fell to its lowest level since February 3. The threat of a US/China trade war has not lifted the USD and reinforces the downward bias. Analysts suspect the market does not think that the US and China face serious dissention and that the global economy may be working toward recovery, causing the dollar to lose its appeal. Overnight, the head of the IMF suggested that the yuan is undervalued, which would typically call for a lower Chinese currency, but thus far this has not lent support to the USD. The improved UK jobless report, along with the S&P affirming Greece’s credit rating, has added to the downside in the dollar. This, in addition to gains in equities and markets embracing anecdotal global recovery news, will continue to pressure the dollar. Resistance in the June dollar index is seen at around 79.50.