The U.S. dollar is giving up some gains across the board as the producer price index numbers for July disappoint. Meanwhile, U.S. sanctions against Turkey pushed the lira lower after diplomatic talks failed. New sanctions from the U.S. against Russia are also causing the ruble to hit a two-year low.
PPI pushes down dollar
The dollar was gaining against its major peers until the producer price index for July came out worse than expected.
The PPI slightly missed expectations of 3.4% growth year over year, coming out at 3.3%. The PPI excluding food and energy grew 2.7% year over year compared to 2.8% expected.
The EUR/USD pair jumped up to 1.1597 on the news – up from the daily lows of 1.1582. USD/JPY dropped from 111.14 to 111.05.
The PPI isn’t the only U.S. data out this morning. Continuing jobless claims for the week ending July 27 also disappointed at 1.755 million. Initial jobless claims for the week ending July 30 were less than expected at 213,000, compared to 220,000 estimated.
Ups and downs of cable
After the U.S. PPI numbers, the GBP/USD pair spiked to 1.2899.
Cable hit as low as 1.284 Thursday morning after reports that the U.K. cabinet was preparing for a no-deal Brexit. The pair has been bouncing up and down today. There were also reports that the E.U. was prepared to make a large concession in the Brexit deal.
The U.K. releases Q2 GDP numbers on Friday and then the U.S. releases the consumer price index for July.
U.S. announces sanctions for Russian nerve-agent attack
The United States is following up on a March attack in the U.K. with new sanctions against Russia.
The attempted poisoning of a former spy and his daughter drew international attention this past spring, with the U.K. and the U.S. condemning Russia and the Kremlin for the attack.
The initial round of sanctions – required under a 1991 act that punishes countries that use chemical weapons in violation of international law – includes limiting U.S. exports to Russia, specifically technology.
The ruble dropped to its lowest levels since 2016 on the announced sanctions. Separately, Congress has proposed “crushing sanctions” on Russia for election interference.
Lira drops lower after diplomatic mission fails
The U.S. sanctions against Turkey are continuing to cause international concern about the state of the Turkish economy and its currency.
The lira hit a new record low against the dollar after a Turkish delegation in Washington refused to agree to releasing an American pastor detained in their country – the whole reason for the U.S. sanctions. Andrew Brunson was jailed on suspicions of espionage and terrorism two years ago and has been recently released to house arrest.
USD/TRY fell to 5.449. The economic situation has international investors and traders calling for an International Monetary Fund rescue.