USD Steady as July PPI Data Takes Center Stage
0h ago|5 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
usdppiforex
Fazen Markets Editorial Desk
Collective editorial team · methodology
Trades XAUUSD on autopilot. Verified Myfxbook performance. Free forever.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The majority of retail investor accounts lose money when trading CFDs. AiX is informational software — not investment advice. Past performance does not guarantee future results.
The U.S. dollar traded modestly lower against a basket of major currencies on August 13, 2026, as markets awaited the release of key Producer Price Index (PPI) data for July. The greenback declined 0.1% against the euro, with the EUR/USD pair trading higher, and edged 0.01% lower against the British pound. Concurrently, U.S. Treasury yields moved lower across the curve, with the 2-year yield dropping 1.9 basis points to 4.180%. This cautious positioning followed a consumer price index report that met expectations the previous day, shifting focus to wholesale inflation figures that could influence Federal Reserve policy decisions.
The July PPI report gains heightened significance following the previous day's Consumer Price Index data, which showed headline inflation rose 0.1% monthly and 3.4% annually. Core CPI increased 0.2% for the month and 2.5% year-over-year, with shelter costs accounting for approximately two-thirds of the monthly increase. This combination of inflation reports provides economists with essential components to construct estimates for the forthcoming Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation gauge.
Market expectations for Federal Reserve action have shifted substantially in recent weeks. Prior to the latest U.S. employment data, markets priced a 62% probability of a September rate hike. Following the CPI release, those expectations declined to approximately 40%, reflecting reduced concerns about broader inflation pressures. The PPI report's details, particularly components that feed directly into PCE calculations, will help narrow the range of core PCE estimates, which currently span from 0.16% to 0.23% for the monthly reading.
Globally, central bank expectations are diverging. In Europe, a Reuters poll showed 83% of economists expect the European Central Bank to raise its deposit rate by 25 basis points to 2.50% in September, with most anticipating rates will remain at that level through year-end. This policy divergence between the Fed and other major central banks creates cross-currents in currency markets.
Currency movements remained contained during the session. The EUR/USD pair gained 0.1%, indicating dollar weakness against the euro. The GBP/USD pair showed minimal movement, advancing just 0.01%. The dollar declined approximately 0.08% against the Japanese yen, as reflected in the USD/JPY pair.
U.S. Treasury yields declined across the maturity spectrum. The 2-year yield decreased 1.9 basis points to 4.180%. The 5-year yield fell 2.2 basis points to 4.353%. The 10-year yield declined 1.8 basis points to 4.674%. The 30-year yield showed the smallest movement, dropping just 0.8 basis points to 5.239%. The yield curve maintained its upward slope from 2-year through 30-year maturities, with larger declines observed at the front and middle of the curve.
U.S. equity futures pointed to a higher open. Dow futures advanced 141 points, S&P 500 futures gained 6.25 points, and Nasdaq 100 futures added 2.9 points. In corporate news, Target Corporation (TGT) traded at $154.00, representing a 1.30% daily gain, within a session range of $150.32 to $154.12.
Consensus estimates projected headline PPI would increase 0.2% month-over-month following a 0.3% decline in the previous report. The year-over-year rate was expected to ease to 4.9% from 5.5%. Core PPI was forecast to rise 0.3% monthly compared with 0.2% previously. Weekly jobless claims were expected to reach 202,000 versus 199,000 in the prior week.
The simultaneous decline in Treasury yields and the U.S. dollar suggests markets are pricing in reduced inflationary pressures and a potentially less hawkish Federal Reserve. This environment typically supports equity valuations, particularly growth-oriented sectors like technology that benefit from lower discount rates. The modest gains in equity futures align with this interpretation.
Currency markets reflect shifting interest rate differential expectations. The euro's strength against the dollar mirrors building expectations for ECB tightening in September, while the dollar's mixed performance indicates uncertainty about the Fed's path. The Japanese yen's modest gains may reflect safe-haven flows amid global uncertainty.
A potential limitation to this analysis is the focus on headline numbers rather than core components. The market reaction will likely hinge on the PPI details that feed into PCE calculations, particularly healthcare services and portfolio management categories. These specific components carry disproportionate weight in the Fed's preferred inflation measure.
Trading flows appear cautious ahead of the data release, with position sizing likely reduced until the PPI report provides clearer direction. Technical analysis mentioned in the source material emphasizes identifying bias, risk, and targets for major currency pairs including EUR/USD, USD/JPY and GBP/USD.
The Federal Open Market Committee meeting on September 20-21 represents the next major catalyst for dollar direction. Between now and then, the July PCE report on August 31 will provide critical confirmation of inflation trends. Markets will monitor whether core PCE falls within the currently projected range of 0.16% to 0.23% monthly.
Technical levels will gain importance if the PPI data triggers sustained momentum. For EUR/USD, traders will watch whether buyers maintain control above key support levels. USD/JPY movement will depend on whether yen strength persists amid elevated Japanese import inflation, which reached 29.1% year-over-year in yen terms.
The Bank of Japan meeting in September remains live despite July PPI coming in below expectations at 7.2% year-over-year versus 7.4% expected. With yen-based import prices still elevated, policymakers may still consider normalization measures. Similarly, the Reserve Bank of New Zealand faces decisions after their inflation expectations survey showed notable cooling, with one-year expectations falling to 2.6% from 3.4%.
Producer Price Index data measures inflation at the wholesale level, indicating price changes that manufacturers and producers receive for their goods and services. For stock investors, PPI serves as a leading indicator of potential consumer inflation, as producers often pass increased costs to consumers. Higher than expected PPI may signal coming margin pressures for companies unable to raise prices, while lower readings suggest contained inflationary pressures that could allow the Federal Reserve to maintain less restrictive policies.
The Consumer Price Index measures what consumers pay for goods and services, capturing the final stage of the pricing pipeline. PPI measures what producers receive for their output, representing an earlier stage in the production process. While CPI includes imports and accounts for consumer substitution between goods, PPI focuses solely on domestic production and does not include imports. Both measures contribute to the Federal Reserve's preferred PCE inflation gauge.
The Federal Reserve prefers the Personal Consumption Expenditures price index because it covers a broader range of expenditures and better reflects consumer substitution patterns. PCE includes more comprehensive measurements of healthcare costs financed through insurance and government programs, and it uses a formula that accounts for how consumers shift spending between categories as prices change. The Fed believes PCE provides a more accurate picture of underlying inflation trends across the entire economy.
Today's PPI report will refine estimates for the Fed's preferred inflation gauge and shape September rate expectations.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
AiX is our free MetaTrader 4 Expert Advisor. Verified Myfxbook performance. No subscription. No fees. XAUUSD breakout engine.
Trade forex with tight spreads from 0.0 pips
Open AccountSponsored
Open a demo account in 30 seconds. No deposit required.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.