Dollar down as trade war intensifies; PPI higher than expected in June
InvestingOnline.com
11/07/2018, 13:55The Dollar index is trading slightly down on Wednesday as investors are worried about the latest news on the trade war. US Producer price index rose more than expected in June.
Donald Trump’s government released a list of 10% tariffs on $200 billion in Chinese goods that will undergo a two-month review process with hearings August 20-23. “The $200 billion figure we’re looking at is roughly equal to their exports to us,” a senior administration official said to CNBC.
The list target some products included in the China 2025 program, a strategic plan to make China a leader in key global industries. The products include technology, fish, fruits, vegetables, tobacco, minerals, energy products industrial supplies, etc.
In a statement, U.S. Trade Representative Robert Lighthizer said: “As a result of China’s retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports. This is an appropriate response under the authority of Section 301 to obtain the elimination of China’s harmful industrial policies. USTR will proceed with a transparent and comprehensive public notice and comment process prior to the imposition of final tariffs, as we have for previous tariffs.”
Producer price index rose more than expected in June
PPI rose 0.3% between May and June as the prices for final demand services reported an increase of 0.4% according to the Bureau of Labor Statistics. Market expectations were for a 0.2% increase. May’s number was a 0.5% rise.
Year over year, producer price index rose 3.4% in June, above market expectations of 3.2% and May figures of 3.1%.
Excluding food and energy, producer price index rose 0.3% in May, at the same monthly rate of May but above 0.2% increase expected by the market.
In the last twelve months, PPI excluding food and energy advanced 2.8% in between June 2017 and 2018, an acceleration in the growth rate from May number of 2.4% and above market expectations of 2.6%.
Dollar index on the defensive
The DXY is trading almost flat on Wednesday as investors are on the wait and see mode following Trump’s administration decision on the trade war. The unit rose to 94.50 earlier on the day, but it couldn’t sustain gains and fell to 94.10 in the American opening bell.
