Dollar loses ground after economic data boosts risk appetite
NEW YORK/LONDON (Reuters) – FX SIGNALS – The U.S. dollar lost ground to other currencies including the euro, the yen and sterling after U.S. economic data provided further evidence that inflation was starting to ease, improving investor appetite for riskier assets and reducing demand for the safe-haven greenback.
The U.S. producer price index (PPI) increased 8.0% for the 12 months through October compared with economist expectations for 8.3% and September’s 8.4% increase, according to the Labor Department data.
The report, following last week’s smaller-than-expected increase in consumer prices for October, encouraged investors who have been closely monitoring inflation data for signs that the Federal Reserve could slow its interest rate hikes, which are aimed at dampening soaring prices.
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Schamotta says the dollar likely peaked in September but he also see a risk for a short-term “sell-off in risk-sensitive currencies and a rally in the dollar if there is a U.S. government funding squeeze before year end.”
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The euro was last up 0.79% at $1.0407 after earlier touching its highest since July 1. In Europe traders were also eying encouraging data such as German economic sentiment ZEW index, which rose in November.
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“Due to concerns about a deep recession over the winter the index had completely collapsed recently. Data also showed employment in the single currency area rose in the third quarter.
Jane Foley, head of FX strategy at Rabobank in London also pointed to other headlines supporting risk currencies against the dollar. She saw U.S. President Joe Biden’s summit meeting with Chinese leader Xi Jinping.
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The dollar index, which measures the currency against six counterparts including sterling and euro; was last down 0.46% at 106.162 after earlier touching 105.34, its lowest point since August.
The greenback was last down 0.68% against Japan’s yen at 138.975.
Sterling was up 1.56% at $1.1941 after earlier rising as much as 2.27%, which put it at a three-month high against the dollar.
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Dollar loses ground after economic data boosts risk appetite
Dollar loses ground after economic data boosts risk appetite
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