Dollar lower on US economy concerns

Published: 15 May at 7 AM Tags: Euro, Dollar,

Softer than expected producer prices data from the US has put pressure on the dollar. The greenback is currently in a trough not seen since the beginning of the year. It now looks increasingly unlikely that the US Federal Reserve will increase interest rates in the near future.

Last month the producer price index fell by 0.4 per cent according to the US Labor Department. However, jobless claims also fell in the last week. In order for the dollar to climb again there will need to be indications that the US economy is strengthening compared to the first quarter of the year.

The dollar index, an indication of how the greenback is faring against a number of other global currencies, is wallowing at 93.133, the lowest it has been since 22 January.

The euro is trading at $1.13965 after hitting a three-month high of $1.14450. Producer inflation data indicates that weak first-quarter growth may be continuing. The dollar index, which had been strong on expectations that the Fed would ramp up interest rates, is likely to remain under pressure. Most analysts do not expect an interest rate hike to come before September.

Against the yen the dollar rose by 0.07 per cent to 119.235 yen.