Currencies Latest Market News: US PPI Fuels Rate Cut Bets, Pressures Dollar
Estimated reading time: 5 minutes
- Softer-than-expected US PPI data
- Increased expectations of Fed rate cuts
- Weakening US dollar
- Strengthening of major currencies
- Improved risk sentiment
Contents
- Softer-Than-Expected US Producer Price Index Weighs on Greenback
- Immediate Impact on Major Currency Pairs
- Lower-Than-Anticipated PPI Figures
- In Summary
- What to Watch Next
Softer-Than-Expected US Producer Price Index Weighs on Greenback
The US Producer Price Index (PPI) data release at 12:30 PM UTC on September 10, 2025, sent shockwaves through the foreign exchange market, reinforcing expectations of imminent Federal Reserve (Fed) rate cuts and putting downward pressure on the US dollar. The softer-than-expected print significantly impacted major currency pairs, highlighting a shift in market sentiment towards a more dovish monetary policy stance from the US central bank.
The August US PPI (excluding food and energy) rose by only -0.1%, a stark contrast to the consensus forecast of +0.3%. This unexpected decline, reported across global newswires and economic calendars such as Reuters’ real-time US economic calendar, fueled speculation about a potential rate cut as early as the upcoming September meeting. Some analysts even began speculating about the possibility of a 50 basis point reduction. Bloomberg’s coverage of the US PPI and its impact on inflation and the dollar further underscored the market’s reaction.
Immediate Impact on Major Currency Pairs
The immediate impact on major currency pairs was notable. The US Dollar Index (DXY) drifted lower, reflecting the diminished appeal of the greenback in anticipation of lower interest rates. The EUR/USD pair surged, breaking above the 1.1700 level and trading at multi-session highs, as reported by Collinson FX. The GBP/USD held gains above 1.3500. The AUD/USD pushed through the 0.6600 mark, though it remains approximately 5% below its September 2024 peak; immediate support levels are seen at 0.6543–0.6519, according to Convera. The NZD/USD also rallied toward 0.5950, a move also noted by Collinson FX and confirmed by Trading Charts’ economic calendar. USD/JPY and USD/CHF remained relatively rangebound, with the Swiss Franc showing only a slight softening against other major currencies, likely attributed to improved risk sentiment. Emerging market currencies did not experience any significant headline moves directly attributable to this specific event.
Lower-Than-Anticipated PPI Figures
The lower-than-anticipated PPI figures suggest that inflationary pressures in the US might be easing more quickly than previously thought. This, in turn, strengthens the case for the Fed to adopt a more accommodative monetary policy stance, potentially through rate cuts, to stimulate economic growth. The improved risk sentiment—as evidenced by the S&P 500 reaching a new high, climbing 0.3%—further supported the rally in high-beta currencies like the Australian and New Zealand dollars. This positive sentiment is consistent with the reports from FXStreet and Convera. While US 2-year and 10-year Treasury yield differentials were not explicitly cited as experiencing sharp moves overnight, the market’s focus shifted decisively to forward rates and the upcoming Consumer Price Index (CPI) report.
In Summary
The unexpectedly weak August US PPI data released on September 10, 2025, triggered a significant shift in market expectations regarding the Fed’s future monetary policy trajectory. This led to a weakening of the US dollar against major currencies and a broader strengthening of risk appetite. The development highlights the ongoing sensitivity of the FX market to inflation data and its implications for central bank policy decisions.
What to Watch Next
- The upcoming release of the US Consumer Price Index (CPI) data, which will provide further insights into inflationary trends and potentially influence the Fed’s decision-making process.
- Any further statements or hints from Fed officials regarding the timing and magnitude of potential rate cuts in the coming months.
- The general market reaction to the continuing evolution of global economic data and geopolitical events.
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