US Dollar Strengthens Despite Weaker US Producer Price Index Data
The US dollar strengthened slightly on Wednesday (July 15th), demonstrating resilience despite weaker-than-expected US Producer Price Index data for June. The headline PPI was flat in June, showing no monthly growth, compared to the 0.2% increase expected by the market, and down from the 0.3% increase in May. On an annual basis, the PPI slowed to 2.3%, also below the 2.5% forecast and the 2.6% figure from the previous month.
The Core PPI, which excludes food and energy, was also weaker than expected. It reached 0.0% month-on-month, missing the 0.2% forecast and down from 0.1% in May. On an annual basis, the Core PPI weakened to 2.6%, compared to the 2.7% forecast and 3.0% in the previous month.
At the time of writing, the US Dollar Index (DXY), which measures the greenback's strength against a basket of six major currencies, was trading higher, nearing 98.85 during American trading hours, as traders considered the data's implications for the Federal Reserve's (Fed) monetary policy outlook.
In the latest development on the trade front, President Donald Trump announced a new bilateral trade agreement with Indonesia on Tuesday. Under the agreement, Indonesia will be subject to a 19% tariff on goods exported to the United States, down from the previously proposed 32%. In return, US exports to Indonesia will be exempt from tariffs and non-tariff barriers.
Trump emphasized that Indonesia has committed to purchasing $15 billion worth of US energy, $4.5 billion worth of agricultural products, and 50 Boeing jets. The agreement, described as a "landmark deal," also grants American ranchers, farmers, and fishermen full access to the Indonesian market, he said.
At the same time, President Trump has threatened to impose new tariffs of up to 200% on pharmaceutical and semiconductor imports from several countries, with the measures likely to take effect later this month. "We're going to start with low tariffs and give the pharmaceutical companies about a year to build up, and then we're going to raise them to very high tariffs," Trump told reporters on Tuesday upon his return from an artificial intelligence summit in Pittsburgh. He also hinted at plans to impose uniform tariffs of more than 10% on goods from more than 100 small countries, including many in Africa and the Caribbean.
Source: FXStreet
