The dollar index (DXY00) Friday fell by -0.33% and posted a 5-week low. Friday’s rally in the S&P 500 to a new all-time high curbed liquidity demand for the dollar. The dollar was also undercut after the University of Michigan’s US consumer sentiment index unexpectedly fell to an 8-month low, which improves the prospects for Fed rate cuts. The dollar has carryover pressure from Thursday’s weaker-than-expected US CPI report, which boosted the chances for a Fed rate cut at the September FOMC meeting. A supportive factor for the dollar was Friday’s stronger-than-expected US PPI report, a hawkish factor for Fed policy.
The US Jun PPI final demand rose +0.2% m/m and +2.6% y/y, stronger than expectations of +0.1% m/m and +2.3% y/y, with the +2.6% y/y gain being the largest year-on-year increase in 15 months. Jun PPI ex-food and energy rose +0.4% m/m and +3.0% y/y, stronger than expectations of +0.2% m/m and +2.5% y/y, with the +3.0% y/y gain being the largest year-on-year increase in 14 months.
