The dollar index (DXY00) on Wednesday tumbled to a 4-week low and finished down by -0.43%. Wednesday’s U.S. May PPI report showed an easing of producer price pressures that knocked T-note yields lower and weighed on the dollar. The dollar recovered from its worst levels after the FOMC raised its median fed funds forecast for this year to 5.6% from 5.1%, signaling another 50 bp of rate hikes this year.
U.S. May PPI final demand eased to +1.1% y/y from +2.3% y/y in April, better than expectations of +1.5% y/y and the slowest pace of increase in more than two years. Also, May PPI ex-food and energy eased to +2.8% y/y from +3.1% y/y in April, better than expectations of +2.9% y/y and the slowest pace of increase in more than two years.
