NEW YORK- The US dollar ended unchanged, erasing an early drop after tamer-than-expected producer price inflation, with investors continuing to evaluate whether that the Federal Reserve will act sooner to snuff out inflation if it persists.
The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5 percent, below economists’ expectations of an 0.6 percent increase. In the 12 months through May, the core PCE price index shot up 3.4 percent, the largest gain since April 1992.
Consumer spending, which accounts for more than two-thirds of US economic activity, held steady following an upwardly revised 0.9 percent jump in April. Economists polled by Reuters had forecast consumer spending rising 0.4 percent.
“The most interesting, salient takeaway from today’s data is that we’re not seeing runaway inflation,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. “The Fed by holding its fire is probably on the right side of the trade at this point.”
Other data showed US consumer sentiment ticked up in June.
The dollar index against a basket of currencies ended unchanged on the day at 91.838, after dropping to 91.524.
Last Friday, the index rose to a two-month high after Fed policymakers on June 16 forecast two rate hikes in 2023, a faster-than-expected timetable to tighten.
