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Dollar flat after more evidence of rising inflation

ForexMay 13, 2021 03:46PM ET
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© Reuters. FILE PHOTO: A packet of former U.S. President Abraham Lincoln five-dollar bill currency is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron/File Photo

By Kate Duguid and Karen Brettell

NEW YORK (Reuters) - The dollar held steady near week highs on Thursday after the U.S. Labor Department reported higher producer prices in April, further evidence that inflation is rising in the United States.

The producer price index rose 0.6% in April after surging 1.0% in March. In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in 2010 and followed a 4.2% jump in March.

Thursday's report follows data on Wednesday showing consumer prices increased by the most in nearly 12 years in April.

"The hotter-than-expected April U.S. PPI report did not have the impact Wednesday's huge CPI gains had on markets," said Ronald Simpson, managing director, global currency analysis at Action Economics in a report.

The dollar index was little changed on the day at 90.741.

The euro gained 0.05% to $1.2076. The greenback fell 0.26% to 109.48 Japanese yen.

Federal Reserve Governor Christopher Waller on Thursday said he expects inflation to exceed the Fed's 2% target for the next two years, but said the Fed would not raise rates until it sees inflation above target for a long time, or excessively high inflation.

Getting people off the sidelines of the economy and into jobs has become a critical issue in keeping the U.S. recovery on track, Richmond Fed President Thomas Barkin said Thursday.

U.S. Federal Reserve Vice Chair Richard Clarida said on Wednesday that weak job growth and strong inflation in April had not changed the central bank's plan to maintain loose monetary policy.

While the surge in inflation is large enough that a full reversal in coming months does not seem likely, a single month of data is unlikely to prompt an immediate shift in the Fed's positioning, wrote Alan Ruskin, macro strategist at Deutsche Bank (DE:DBKGn).

The Australian dollar, seen as a proxy for risk appetite, was up 0.02% at $0.7726 versus the U.S. dollar, after its biggest daily drop since March on Wednesday.

Bitcoin was lower a day after plunging 17% when Tesla (NASDAQ:TSLA) boss Elon Musk said his company would stop accepting the digital tokens as payment for its cars.

It was last down 1.47% at $48,632.

Bitcoin is still higher than where it was just before Tesla said on Feb. 8 that it had invested around $1.5 billion in bitcoin and would accept it for payment in the near future.

Dollar flat after more evidence of rising inflation
 

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Comments (3)
RED LEGION
M_CAP_F11ND May 13, 2021 5:31PM ET
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Powell more then likely to fo back on his work...
Laurent Chavey
Laurent Chavey May 13, 2021 2:16AM ET
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bubble started in 2017, time to burst it
The GOAT
The_Goat May 12, 2021 9:26PM ET
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But the question should be how long do to rates remain at this level before the FED has to do another round of QE to drop it. Inflation will never be beaten cause real interest rates are already negative
Daniel Hodel
Daniel Hodel May 12, 2021 9:26PM ET
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Spot on! Trump wanted negative interest rates & basically got it through inflation & money printing. Welcome to Japan 2016.
oeg vokar
oeg vokar May 12, 2021 9:26PM ET
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Daniel Hodel  Trump said "negative rates is a ball ship and made fun of Europe". Don't mix politics with economy
 
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