[NEW YORK] The dollar fell for a third straight day on Thursday as negative US inflation data underlined weakness that could forestall the Federal Reserve's plan to raise ultra-low interest rates.
While the latest US jobless claims report showed the labor market on a tightening course, one of the Fed's key objectives along with price stability, the government reported US producer prices unexpectedly resumed their downward trend in April, getting the second quarter off to a weak start.
The producer price index fell 0.4 per cent in April, more than wiping out March's 0.2 per cent rise which had been the first increase since last October. Economists on average had expected another 0.2 per cent rise.
"We don't believe the PPI will test the Fed's confidence that inflation will return to its target of 2.0 per cent. However, it is a reminder that disinflation hasn't worked its way through the economy yet," said Ryan Sweet of Moody's Analytics.
The euro extended its gains in "a continuing move driven by rising eurozone bond yields and a general correction in the US dollar," said Omer Esiner of Commonwealth Foreign Exchange.
"The recent run of weak data all but removes the possibility of a June rate hike by the Fed and should see the dollar continue to struggle until upcoming data starts to paint a more consistently positive picture of the economy."