dollar weakens slightly But the depreciation was not much as it was still supported by the Producer Price Index (PPI) data that rose more than expected. This will be the factor that encourages the US Federal Reserve (Fed) to move forward with raising interest rates.
This week has been quite an active week. Four central banks, including the Fed, will hold the final policy meeting this year. While the United States will release the US Consumer Price Index (CPI) on December 13 as well.
As of 7:01 p.m. local time, the dollar index, which measures the greenback once morest a basket of six major currencies, was down 0.09% to 104.72.
The dollar weakened 0.32% once morest the euro to 1.0564 euros, and 0.15% once morest the pound to 1.2276 pounds, but gained 0.20% once morest the yen to 136.82 yen.
The U.S. Department of Labor released the PPI, a measure of inflation on producer spending. month of November The PPI figure was higher than analyst expectations. and shattered hopes that US inflation had peaked.
The headline PPI, which includes food and energy, rose 7.4 percent in November year on year. That was above analysts’ expectations of 7.2%.
Month-on-month, the headline PPI rose 0.3% in November, above analysts’ expectations of 0.2%.
The core PPI, which excludes food and energy, rose 6.2 percent in November from a year earlier. That was above analysts’ expectations of 5.9%.
Month-on-month, core PPI rebounded 0.4% in November, above analysts’ expectations of 0.2%.
Investors are eyeing the Consumer Price Index (CPI) on Dec. 13 and the Fed’s monetary policy meeting on Dec. 13-14, the last meeting of the year.
Markets will also be keeping an eye on Fed Chairman Jerome Powell’s statement on the direction of Fed interest rates in 2023, as well as the release of the policy interest rate forecast (Dot Plot) at the meeting. This will signal the Fed’s interest rate outlook through 2025.
Investors expect the Fed to raise interest rates by 0.50% to a range of 4.25-4.50% in this round of meetings. following rising 0.75% for four consecutive times While Mr. Powell signaled that the Fed would slow down on a rate hike in December.
Markets also expect the Fed to raise interest rates past 5.00% in the middle of next year following the release of strong non-farm payrolls report. This indicates that the Fed’s tightening of monetary policy in the past has not been able to dampen the heat in the labor market. This has led to expectations that the Fed will continue to raise interest rates next year to slow the economy and stem a spike in inflation.
