The US Dollar slumps on Wednesday after CBS reported that US President Donald Trump asked a group of House Republicans whether he should fire Federal Reserve Chair Jerome Powell. The news offsets earlier gains triggered by softer-than-expected US Producer Price Index (PPI) data for June, which initially lifts the Greenback amid signs of easing inflation.

At the time of writing, the US Dollar Index (DXY), which measures the Greenback's strength against a basket of six major currencies, is trading sharply lower near 98.00 during American trading hours, retreating from an intraday high of 98.91 as traders react to renewed political uncertainty surrounding the Fed.

Headline PPI was flat in June, showing no monthly growth, compared to the 0.2% increase markets had expected, and down from a 0.3% rise in May. On an annual basis, PPI slowed to 2.3%, also below the 2.5% forecast and the 2.6% reading from the previous month.

Core PPI, which excludes food and energy, was also weaker than expected. It came in at 0.0% MoM, missing the 0.2% forecast and down from 0.1% in May. On a yearly basis, Core PPI eased to 2.6%, compared to 2.7% expected and 3.0% in the previous month.

In a fresh development on the trade front, President Donald Trump announced a new bilateral trade agreement with Indonesia on Tuesday. Under the deal, Indonesia will face a 19% tariff on goods exported to the United States, a reduction from the earlier proposed 32%. In return, US exports to Indonesia will be exempt from tariffs and non-tariff barriers.

Trump highlighted that Indonesia has committed to purchasing $15 billion worth of US energy, $4.5 billion in agricultural products, and 50 Boeing jets. The agreement, described as a "landmark deal," also grants American ranchers, farmers, and fishermen full access to the Indonesian markets, he said.

At the same time, President Trump is threatening to impose new tariffs of up to 200% on pharmaceutical and semiconductor imports from several countries, with measures likely to take effect by the end of the month. "We're going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we're going to make it a very high tariff," Trump told reporters on Tuesday as he returned from an artificial intelligence summit in Pittsburgh. He also signaled plans to apply a uniform tariff of over 10% on goods from more than 100 smaller countries, including many in Africa and the Caribbean.(Cay)

Source: Fxstreet