U.S. Dollar Falls Sharply As Producer Inflation Slows

(RTTNews) - The U.S. dollar dropped against its major counterparts in the New York session on Thursday, as the nation's producer prices rose less than expected in June, strengthening the case for a pause in tightening after a 25 basis-point hike from the Federal Reserve this month.

Data from the labor Department showed that the producer price index crept up by 0.1 percent in June after falling by a revised 0.4 percent in May.

Economists had expected producer prices to rise by 0.2 percent compared to the 0.3 percent dip originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to just 0.1 percent in June from a revised 0.9 percent in May.

The pace of growth was expected to slow to 0.4 percent from the 1.1 percent originally reported for the previous month.

The data suggested that Fed rate hikes could stop after the 25-basis point increase at the July 25-26 meeting.

Meanwhile, a separate Labor Department report unexpectedly showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended July 8th.

The Labor Department said initial jobless claims slipped to 237,000, a decrease of 12,000 from the previous week's revised level of 249,000.

The dip surprised economists, who had expected jobless claims to inch up to 250,000 from the 248,000 originally reported for the previous week.

The greenback fell to a 1-1/2-year low of 1.1195 against the euro and more than a 1-year low of 1.3114 against the pound, from yesterday's closing values of 1.1130 and 1.2987, respectively. The greenback is seen finding support around 1.14 against the euro and 1.33 against the pound.

The greenback moved down to near a 2-month low of 138.05 against the yen and near a 1-year low of 1.3112 against the loonie, from its previous close of 138.49 and 1.3186, respectively. The greenback may face support around 134.00 against the yen and 1.29 against the loonie.

The greenback touched 0.8587 against the franc, a level unseen since January 2015. The pair had ended yesterday's deals at 0.8669. If the greenback falls further, 0.83 is possibly seen as its next support level.

The greenback depreciated to near a 4-week low of 0.6890 against the aussie and more than a 5-month low of 0.6395 against the kiwi, from yesterday's closing quotes of 0.6786 and 0.6295, respectively. The greenback is likely to challenge support around 0.70 against the aussie and 0.64 against the kiwi.