The dollar rose on Wednesday after a report showed U.S. producer prices rebounded in August and as traders turned their focus to consumer inflation data due on Thursday that will be closely watched by the U.S. Federal Reserve as it considers when to next raise interest rates.
The index rose after the U.S. Labor Department said its producer price index for final demand increased 0.2 percent in August after slipping 0.1 percent in July. The rebound was driven by a surge in the cost of gasoline.
While domestic producer prices rose less than forecast, “the rebound does suggest that the U.S. economy retains underlying momentum”.
The overall demand picture is quite strong and prices are beginning to respond to an increases in demand in the real economy.
Inflation is being closely watched for clues on the timing of the next interest rate increase.
The dollar, which rallied to its strongest levels in a decade and a half at the start of 2017, has faltered since on the view that the pro-growth, pro-inflation policies promised by U.S. President Donald Trump had not materialized, as well as a pushing back of Fed rate hike expectations.
bonus: Broadening Descending Wedge
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