The US dollar plunged on Thursday to its lowest level against the euro since early April 2022 after the producer price index (PPI) in the United States contracted.
The idea that slowing inflation will allow the US Federal Reserve (Fed) to take its foot off the gas caused the greenback to lose 0.63% at around 3:55pm (BST) and sink to $1.1060 to the euro.
The pound, meanwhile, was up 0.29% at $1.2521, a 10-month high.
Gold prices were up 1.43% at $2,043.61 an ounce, approaching their all-time high - reached in August 2020 - of $2,075.47.
Producer prices fell 0.5% on a month-on-month basis, after dropping 0.1% in February, according to the index released by the Labour Department.
There are reasons to think that the decline in producer-side inflation presages a sharper decline in consumer inflation in the months ahead, according to Jason Schenker, an analyst at Prestige Economics. He noted that “the Fed probably wants CPI inflation to look like the PPI report.”
The PPI data follows the consumer price index (CPI), which hit its lowest level in nearly two years in March, but remains at 5% year-on-year.
