NEW YORK/LONDON, May 14 - The dollar eased on Tuesday after an unexpected increase in U.S. producer prices in April amid strong gains in the costs of goods and services, indicating inflation remained stubbornly high early in the second quarter.
"It's pressing kind of neutral, almost as if people have cleaned up their positioning and are kind of flat going into tomorrow," he said, referring to the release on Wednesday of the consumer price index for April. The producer price index for final demand rose 0.5% in April after falling by a downwardly revised 0.1% in March, the Labor Department's Bureau of Labor Statistics said.
The Fed may not cut at all this year and if it does, it may"cut once and it'll be late in the year," he said, adding that a real downward move in rent inflation may change his mind.Wednesday's report on core consumer prices is expected to show CPI rose 0.3% month-on-month in April, down from a 0.4% growth the prior month, according to a Reuters poll.
Money markets have dialed back their expectations of Fed rate cuts to about 44 basis points of easing this year, according to LSEG data. But the market remains bearish on the currency given the massive gap between Japan's ultra-low yields and those in other major economies.
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