The dollar is moderately depreciating against the euro and appreciating against the yen on Wednesday morning as investors assess geopolitical risks and U.S. inflation data.
The ICE-calculated index, which shows the U.S. dollar’s performance against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), is up less than 0.1%, as is the broader WSJ Dollar Index.
The day before, the dollar index had fallen to a three-month low on further signals of slowing U.S. inflation.
As it became known on Tuesday, producer prices in the United States (PPI) rose 8 percent year-over-year in October and 0.2 percent against September. Analysts polled by Trading Economics forecasted an average increase of 8.3% for the former index and 0.4% for the latter.
Meanwhile, Rafael Bostic, head of the Federal Reserve Bank (FRB) in Atlanta, expressed the view that the Fed should continue to raise interest rates until there are signs of widespread easing in inflation. “We haven’t seen that yet, so I believe we will need new rate hikes,” Bostick wrote. He added, however, that he sees “glimmers of hope” in the past three months, but prices are falling mostly for goods, not services.
The currency market is also reacting to news of a rocket explosion in Poland, which killed two people. A number of media outlets wrote that the missile could have come from Russian territory.
However, Polish President Andrzej Duda said the government could not yet confirm who fired the missile, and U.S. President Joe Biden said it was unlikely that it came from Russian territory.
The Russian Defense Ministry denied that the rockets were Russian, saying that the military had not struck any targets near the Ukrainian-Polish border.
The euro/dollar pair was trading at $1.0370 by 7:52 a.m., versus $1.0350 at the close of Tuesday’s session, with the euro strengthening 0.2%.
The dollar/yen is up 0.4% at 139.82 yen, up from 139.31 yen at the end of last session.
The pound is stable and trading at $1.1865.
