Dollar slips after cooling producer prices, Middle East escalation in focus

By Laura Matthews and Samuel Indyk

NEW YORK/LONDON, July 15 (Reuters) - The dollar slipped against large currencies connected Wednesday aft softer-than-expected U.S. shaper prices reinforced signs of easing inflation, bolstering the presumption that the Federal Reserve tin stay diligent connected involvement ‌rates adjacent arsenic investors weighed renewed strikes connected Iran.

The Producer Price Index for last request dropped 0.3% successful June aft ‌a downwardly revised 0.6% summation successful May, the Bureau of Labor Statistics said connected Wednesday. Economists polled by Reuters had forecast the PPI unchanged aft a antecedently reported 1.1% ​advance successful May.

The dollar was level against the yen astatine 162.19 yen. The euro steadied astatine $1.1433, portion sterling roseate 0.44% to $1.3447.

The U.S. dollar index, which tracks the currency against six large peers, softened 0.09% to 100.79. It fell 0.4% successful the erstwhile session, its biggest diminution successful astir 2 weeks, aft touching its highest level since July 2.

"Today's PPI numbers further solidify the thought that the Federal Reserve tin spend to hold until they summation ‌borrowing costs again," said Juan Perez, manager of trading astatine ⁠Monex USA.

Meanwhile, New York Fed President John Williams said ostentation remains "unquestionably excessively high" but whitethorn person peaked and should statesman easing, adding that monetary argumentation is good positioned to usher it backmost to target.

EYES ON THE MIDDLE ⁠EAST

The latest escalation successful hostilities betwixt the U.S. and Iran kept lipid prices adjacent one-month highs, maintaining unit connected the ostentation outlook.

The U.S. subject said it had begun a caller question of strikes connected Iran astatine 6 a.m. ET (1000 GMT) connected Wednesday, aft U.S. President Donald Trump said connected Tuesday that ​Washington had ​reimposed a naval blockade of each Iranian ports.

The dollar has tended to payment ​during flare-ups successful the struggle due to the fact that of its safe-haven ‌status and the comparatively constricted interaction of higher vigor prices connected the U.S. system compared with immoderate peers.

Cooler U.S. ostentation had earlier weighed connected the dollar. U.S. user ostentation slowed much than expected to 3.5% connected a year-on-year ground successful June, information showed connected Tuesday.

The header user terms scale fell 0.4% month-on-month, its archetypal diminution since April 2020, arsenic vigor prices retreated.

"The caller declines successful CPI and PPI person mostly been attributed to vigor terms volatility pursuing the pullback aft the Iran ceasefire," said Steve Kolano, main concern serviceman astatine Integrated Partners. "However, fixed caller events, that ‌trend is expected to reverse."