Investing.com - The U.S. dollar was flat on Tuesday, after the Federal Reserve came in for another barrage of criticism from President Donald Trump for allegedly keeping interest rates too high.
Trump tweeted that the euro and other currencies are undervalued against the dollar, “putting the U.S. at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!”
The euro inched up 0.1% to 1.1319. In contrast to the Fed, the European Central Bank has been explicit about being ready to cut interest rates and, if need be, resume its bond-buying program to support the economy. The messsage articulated last week by President Mario Draghi was repeated Tuesday by both Bank of Finland Governor Olli Rehn and his Slovak counterpart Peter Kazimir. Rehn is touted as a possible successor to Draghi.
The Fed's room to cut rates appeared to expand a little later on Tuesday as U.S. producer prices rose at only 0.1% in Mat, the slowest pace in nearly a year. The PPI, which measures the change of the price of goods sold, is a leading indicator for inflation.
Traders have been speculating on the possibility of the central bank cutting rates due to slowing inflation and rising trade tensions after Fed Chair Jerome Powell signalled the bank would “act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”
The Fed is expected to keep rates unchanged at its meeting on June 19, with a 76% chance cut priced in for its July meeting.
The dollar was higher against the safe haven Japanese yen, with USD/JPY rising 0.2% to 108.64.
Sterling was also higher, with GBP/USD gaining 0.3% to 1.2717, while USD/CAD slipped 0.02% to 1.3260.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was flat at 96.708 by 10:04 AM ET (14:04 GMT).