Softer US producer inflation data reinforces expectations the Federal Reserve may pause rate hikes in September.
EUR/USD climbed to 1.1537 on Thursday after US Producer Price Index data showed no monthly increase in July, below expectations. The annual PPI rate slowed to 4.7% from 5.5%, while core PPI rose 0.2% month-over-month, down from 0.4% in June.
The figures follow Wednesday’s Consumer Price Index report, which also indicated easing inflation, and a weaker-than-expected July jobs report. Together, the data has reduced market expectations for a Federal Reserve rate hike in September to 32%, down from 55% a week ago.
The US Dollar Index retreated below 100, while US Treasury yields fell, with the 2-year yield dropping to 4.14%, its lowest since July 17. Despite the moves, traders remain cautious amid elevated energy prices and stalled progress on inflation.