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U.S. Dollar Falls on Disappointing PPI Data

The U.S. dollar fell on Wednesday. - The U.S. dollar slumped against other currencies on Wednesday after a leading inflation indicator dented expectations for a Federal Reserve rate hike in December.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.17% to 94.89 as of 9:43 AM ET (13:43 GMT).

The Labor Department said on Wednesday its producer price index decreased 0.1% last month. In the 12 months through August, the PPI rose 2.8%. Economists had forecast the PPI rising 0.2% last month and increasing 3.2% from a year ago.

The PPI is a leading indicator of inflation and is closely watched by the Fed because when producers pay more for goods, they are more likely to pass price increases on to the consumer.

The lower-than-expected data indicated the Fed could slow down rate increases, with the the chance of December hike falling to 79.8%.

Trade tensions also lingered as investors watched trade developments. China is planning to ask the WTO for permission to impose sanctions on the U.S. at a meeting next week in response to U.S. President Donald Trump threatening to impose tariffs on almost all Chinese imports, or about $467 billion in goods.

The dollar fell against the safe-haven yen, with USD/JPY decreasing 0.35% to 111.24. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.

The euro was higher on the lower greenback. EUR/USD rose 0.12% to 1.1619. Sterling was lower amid ongoing Brexit concerns, with GBP/USD falling 0.13% to 1.3016.

The Australian dollar was higher, with AUD/USD up 0.24% to 0.7136, while NZD/USD rose 0.21% to 0.6538. The loonie rose against the dollar, with USD/CAD decreasing 0.52% to 1.30.

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