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Dollar Depreciates As Soft U.S. Producer Inflation Data Raises Hopes For Slower Rate Hike

dollar 080219 15nov22 lt

The U.S. dollar lost ground against its major counterparts in the European session on Tuesday, after a data showed that the nation's producer prices rose much less than expected in October, adding to expectations for slower rate hikes from the Federal Reserve in the future.

Data from the Labor Department showed that the producer price index inched up by 0.2 percent in October, matching a revised uptick in September.

Economists expected producer prices to climb by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

The currency was further weighed by comments from Fed Vice Chair Lael Brainard suggesting a slowdown in the pace of policy tightening soon.

"I think it will probably be appropriate soon to move to a slower pace of increases, but I think what's really important to emphasize is... we have additional work to do," Brainard said in an interview with Bloomberg in Washington.

The benchmark yield on the 10-year treasury note dropped to 3.807 percent. Yields move inversely to bond prices.

The USD/JPY pair touched 137.66, its weakest level since August 29. The pair was worth 139.88 when it ended deals on Monday. The greenback is seen finding support around the 121.00 mark.

The greenback declined to a 4-1/2-month low of 1.0482 against the euro, from yesterday's close of 1.0327. The greenback is likely to face support around the 1.12 region, if it falls again.

The USD/CHF pair fell to 0.9356 for the first time since April 14. At Monday's close, the pair was valued at 0.9426. Next key support for the greenback is likely seen around the 0.90 level.

The greenback was down against the pound, at nearly a 3-month low of 1.2029. The pound-greenback pair had finished yesterday's trading session at 1.1754. Should the greenback falls further, it is likely to test support around the 1.27 region.

The greenback declined to more than a 2-month low of 0.6798 against the aussie and near a 3-month low of 0.6203 against the kiwi, from Monday's closing values of 0.6699 and 0.6094, respectively. The greenback may test support around 0.70 against the aussie and 0.65 against the kiwi.

The greenback touched a 2-month low of 1.3226 against the loonie immediately after the data, but it has climbed to a 4-day high of 1.3335 around 9:45 am ET. The greenback was trading at 1.3313 per loonie at yesterday's close. Next near term resistance for the greenback is found around the 1.35 level.

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