Summary Dollar fell for a third straight day Thursday as US pipeline inflation turns negative.
NEW YORK (AFP) - The dollar fell for a third straight day Thursday as negative US inflation data underlined weakness that could forestall the Federal Reserve s plan to raise ultra-low interest rates.
While the latest US jobless claims report showed the labor market on a tightening course, one of the Fed s key objectives along with price stability, the government reported US producer prices unexpectedly resumed their downward trend in April, getting the second quarter off to a weak start.
The producer price index fell 0.4 percent in April, more than wiping out March s 0.2 percent rise which had been the first increase since last October. Economists on average had expected another 0.2 percent rise.
"We don t believe the PPI will test the Fed s confidence that inflation will return to its target of 2.0 percent. However, it is a reminder that disinflation hasn t worked its way through the economy yet," said Ryan Sweet of Moody s Analytics.
The euro extended its gains in "a continuing move driven by rising eurozone bond yields and a general correction in the US dollar," said Omer Esiner of Commonwealth Foreign Exchange.
"The recent run of weak data all but removes the possibility of a June rate hike by the Fed and should see the dollar continue to struggle until upcoming data starts to paint a more consistently positive picture of the economy."
