• Annual producer inflation in the US rose at a softer pace than expected in May.
• US Dollar Index breaks below 103.00 to fresh weekly lows.

The Producer Price Index (PPI) for final demand in the US rose 1.1% on a yearly basis in May, down from the 2.3% increase recorded in April, the data published by the US Bureau of Labor Statistics revealed on Wednesday. This reading came in lower than the market expectation of 1.5%. It is the lowest level since December 2020. 

The annual Core PPI increased 2.8% in the same period, compared to the market expectation of 2.9%. On a monthly basis, the PPI declined 0.3% and the Core PPI rose 0.2%.

Market reaction:

The US Dollar fell across the board after the PPI report, with the DXY breaking below 103.00 and reaching its lowest level since May 22. The greenback is under pressure following Tuesday's release of the US Consumer Price Index and ahead of the FOMC statement, which is set to be released later on Wednesday.