The U.S. dollar was close to its best weekly result on May 13, after the U.S. Labor Department reported higher producer prices in April, further evidence that inflation is rising in the country.
The producer price index (PPI) rose 0.6% in the previous month after jumping 1.0% in March. In the 12 months to April, the PPI rose 6.2% That was the biggest year-on-year rise since the series was revamped more than a decade ago and followed a 4.2% jump in March. Thursday’s report follows data on Wednesday and showed that consumer prices rose by the most in more than a decade in April.
The dollar index was little changed on Thursday and stood at 90.741. On Thursday, the euro added 0.5% to $1.2076. The world’s reserve currency dropped 0.26% to 109.48 Japanese yen.
Interestingly, the Australian dollar gained 0.02% against the greenback to $0.7726. It rose to $0.7726 after its biggest daily drop since March on Wednesday.
Dollar and the Federal Reserve
Christopher Waller, who is a member of the Federal Reserve Board of Governors made an interesting comment. He expects inflation to surpass the Fed’s 2% target for the next two years. Christopher Waller mentioned that the Federal Reserve would not raise rates until it sees inflation above target for a long time or excessively high inflation.
Richard Clarida who is the current Federal Reserve Vice Chair also made a comment. Clarida made it clear that weak job growth and strong inflation in April had not changed the bank’s position. As can be seen from the comments above, the Fed has no intention to change its monetary policy. A single month of data is highly unlikely to prompt an immediate shift in the Fed’s position.
Bitcoin and Tesla
Bitcoin was lower a day after dropping 17% when Elon Musk made an unusual announcement. His company changed its decision regarding Bitcoin. Tesla will no longer accept it as a form of payment, due to the impact of Bitcoin mining on the environment. The company decided to gather more information about other cryptocurrencies that require less energy for transactions.
As of Thursday, bitcoin was still higher than where it was just before Tesla’s announcement several months ago. On February 8, the company announced that it invested around $1.5 billion in bitcoin. Tesla also said that it would start accepting bitcoin as a payment method in the near