U.S. Dollar Lower As Soft PPI Data Boosts Rate Cut Hopes

(RTTNews) - The U.S. dollar weakened against its major counterparts in the New York session on Tuesday, as producer prices rose less than expected in July, strengthening expectations that the Federal Reserve is likely to cut interest rates by 50 basis points in September.

Data from the Labor Department showed that the producer price index for final demand inched up by 0.1 percent in July after rising by 0.2 percent in June. PPI was expected to rise by 0.2 percent.

Meanwhile, the report said the annual rate of producer price growth slowed to 2.2 percent in July from an upwardly revised 2.7 percent in June.

Economists had expected the annual rate of producer price growth to decelerate to 2.3 percent from the 2.6 percent originally reported for the previous month.

Soft PPI data raised the odds of a 50 basis point rate cut at the Fed's meeting on September 17-18.

Investors await Wednesday's CPI data and Thursday's retail sales data to assess the outlook for monetary policy.

The greenback fell to a 1-week low of 1.0962 against the euro and near a 2-week low of 1.2837 against the pound, off its early highs of 1.0913 and 1.2756, respectively. The currency may locate support around 1.12 against the euro and 1.31 against the pound.

The greenback declined to a 3-week low of 0.6618 against the aussie and near a 4week low of 0.6064 against the kiwi, from its early highs of 0.6579 and 0.6017, respectively. The currency is seen finding support around 0.68 against the aussie and 0.63 against the kiwi.

The greenback edged down to 146.79 against the yen and 0.8641 against the franc, reversing from its early highs of 147.94 and 0.8679, respectively. The currency is poised to challenge support around 142.00 against the yen and 0.85 against the franc.

The greenback reached as low as 1.3719 against the loonie. If the currency falls further, it is likely to test support around the 1.33 region.