Investing.com – The dollar rose sharply against a basket of major currencies on Wednesday, shaking off downbeat economic data showing wholesale inflation undershot expectations ahead of consumer inflation data due Thursday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.62% to 92.46.
The Labor Department said on Wednesday its producer price index for final demand increased 0.2% last month after slipping 0.1% in July. In the 12 months through August, the PPI rose 2.4% after rising 1.9% in July.
The weaker-than-expected wholesale inflation data failed to dent rate-hike expectations, as U.S. treasury yields added to gains, lifting demand for the greenback.
The slowdown in inflation is being closely monitored as it could derail the Federal Reserve’s plan to hike rates at least once more this year.
The Federal Reserve Open Market Committee is slated to meet on Sept. 19-20 to review economic and financial conditions, and determine the appropriate stance of monetary policy. Ahead of the FOMC meeting, several fed members earlier in September urged the central bank to shelve plans for additional rate hikes.
Meanwhile, the pound retreated from one-year highs against the greenback, falling 0.65% to $1.3196, as the latest UK labour market data showed that wage growth remained sluggish ahead of the Bank of England’s rate decision due Thursday.
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