The US dollar fell against a basket of its major peers on Tuesday, despite an economic report that showed stronger inflation than expected last month. The greenback further weakened against the euro as the German economy displayed solid growth in the third quarter of 2017, which supported the shared currency.
The US Bureau of Labor Statistics released a report earlier today that revealed higher prices at factories than what analysts forecasted. The producer price index for final demand rose 0.4% in October on a seasonally adjusted basis following an equal gain in September. Last monthâs increase compared to an expected gain of 0.1%.
Prices for final demand services were 0.5% higher last months, while final demand goods rose 0.3%. Octoberâs data placed the indexâs climb over the last 12 months at 2.8%, which is the largest increase since the 12 months ended February 2012. The core producer price index, which excludes food and energy prices and trade services, rose 0.2% in October to reach an increase over 12 months of 2.3%.
About half of the rise in final demand goods came from bigger costs at pharmaceutical firms, followed by higher prices for industrial chemicals, diesel fuel, and tobacco products. October marked the third consecutive month of gains for final demand goods. Meanwhile, higher final demand services last month largely resulted from margins for fuel retailing and marked the biggest increase since April.
The US currency brushed off the positive data as investors continued to anticipate any signs of development in the Republican tax reform story. Republicans at the Senate unveiled a plan last week that would push a major part of the tax plan, which is a deep cut to corporate taxes, for a year later than a rival plan from House Republicans.
Meanwhile in Europe, the shared currency gained ground against the greenback following a number of strong economic releases. Destatis, Germanyâs official statistical office, said that the nationâs gross domestic product increased 0.8% in the third quarter to beat estimates of a 0.6% increase. Eurostat, the European Unionâs counterpart office, stated in a separate report that the regionâs economy grew 0.6% in the same quarter.
EUR/USD traded at1.1754 as of 14:25 GMT on Tuesday after touching 1.1760 at 12:40 GMT, the pairâs highest level since October 26. EUR/USD began trading today at 1.1672. GBP/USD was at 1.3120 after rising to 1.3127 at 14:05 GMT, the pairâs strongest level for the day. GBP/USD started the day at 1.3121.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, was at 94.08 as of 14:25 GMT today from 94.49 yesterday.
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