Strong US PPI Keeps Inflation Expectations High Despite Modest July CPI
The dollar declined on Friday however, extends the streak of weekly gains for the second consecutive week. Investors continue to assess the likelihood of whether the Fed could announce plans to wind down stimulus in the coming weeks which offer solid support to the US currency. Since the start of the week, the US currency gained 0.2% after rising 0.8% the previous trading week.
Data released Thursday showed that US producer prices in the 12 months ending in July rose at the most in more than a decade.
At the same time, consumer price growth slowed, although it remained at a 13-year high on an annualized basis. Given that producer prices are affecting consumer prices, the CPI may not have hit the ceiling yet, and this is again driving up rates on a potential Fed stimulus roll-off in September.
Most analysts polled by Reuters expect the Fed to announce a plan to cut asset purchases in September.
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