Investing.com – The dollar fell sharply against a basket of major currencies amid a duo of weaker-than-estimated economic reports while a sharp uptick in euro added to downside momentum.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.51% to 91.63.
The Labor Department said Thursday its producer price index for final demand fell 0.1% last month after rising 0.2% in November. In the 12 months through November, the PPI rose 2.6, missing expectation for a 3% rise.
The softer wholesale inflation data renewed inflation jitters, easing investor optimism for a more aggressive Federal Reserve stance on monetary policy as investors awaited a consumer inflation report due Friday.
RBC said the softer PPI data signalled “downside risk” to the consumer prices index (CPI) data slated for Friday, noting that the finished consumer goods component fell 0.4% after an impressive 1.7% gain in November.
In a separate report, The U.S. Department of Labor reported Thursday that initial jobless claims increased 11,000 to a seasonally adjusted 261,000 for the week ended Jan. 5, missing forecasts of a 4,000 decrease.
Amherst noted that jobless claims reached their highest since September but remained confident that initial claims should return to “normal” as seasonally volatility is expected to disappear in the coming weeks.
The dollar had started the session on the front foot after reversing some of Wednesday’s losses as China rejected a media report suggesting it plans to slow or halt US Treasury bonds purchases, saying it is either “fake news” or based on incorrect sources.
Also weighing on the dollar was a sharp move higher in the euro above $1.20, following the release of hawkish European Central Bank (ECB) minutes.
The European Central Bank could consider a gradual shift in guidance from early 2018, the minutes of the ECB December meeting showed, as policymakers saw ‘some comfort' in wage dynamics despite ongoing concerns over subdued inflation.
GBP/USD rose 0.22% to $1.3537 as traders await next Tuesday's release of UK consumer price index (SPI) data for direction.
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