The dollar is edging lower against the euro and the pound after worse-than-expected producer price index. The euro and the pound fell earlier Wednesday, plagued by their respective political concerns.
Dollar dips on PPI
Earlier Wednesday, the dollar was climbing higher against its major peers thanks to Brexit uncertainty and reports of a lower growth outlook by the European Central Bank.
However, the producer price index for August came out lower than expected and is causing the dollar to give back some gains.
The PPI excluding food and energy grew 2.3% YoY compared to 2.7% estimated. The month-over-month measurement declined 0.1% compared to growth of 0.2%.
The lower PPI isn’t expected to impact the Federal Reserve’s outlook and potential rate increase at its next meeting on Sept. 25.
ECB expected to lower forecasts ahead of meeting
The European Central Bank is said to be lowering its economic growth outlook for the Eurozone due to lower demand due to global trade uncertainty.
After the Governing Council meeting, the ECB is set to release its monetary policy statement and interest rate decision on Thursday, at which time the forecasts would also be revealed.
The ECB is not expected to raise rates Thursday, or any time before September 2019, but we’ll see if there is any indication of a change in that path.
Alongside trade, the economic crisis of Turkey and the inability of the E.U. and the U.K. to reach a Brexit deal are also weighing on the economic outlook.
The EUR/USD pair dipped lower Wednesday morning to 1.157 before climbing back up to 1.159 on lower U.S. PPI.
Differing Brexit views pulling down the pound
GBP/USD dipped below 1.30 Wednesday morning as Brexit concerns pulled the pound lower. Since the pound got a boost Monday from chief E.U. Brexit negotiator Michel Barnier’s optimism, there has been little other signs of hope for a Brexit deal.
Instead, other fractions in the U.K. are coming up with their own plans separate from Theresa May.
A group of euroskeptic conservatives published their plan for the Irish border – a key issue in the E.U.- U.K. negotiations. The group says it’s not as big of an issue as its been made out to be and that physical checkpoints are not needed on the Ireland and Northern Ireland border.
The continued varying opinions around Brexit have more and more questioning the lifespan of Prime Minister Theresa May’s leadership