Why the US dollar climb after PPI was quickly erased

Read full post at forexlive.com

The
US
producer
price
index
rose
2.6%
y/y
in
the
largest
annual
rise
since
March
2023.
The
news
initially
caught
the
market
by
surprise
and
gave
a
lift
to
the
US
dollar.

However
the
move
was
short-lived
because
it
appears
as
though
there
was
a
one-off
skew
in
the
numbers.
All
the
gains
were
driven
by
services
while
the
index
for
final
demand
goods
decreased
0.5%.

Within
services,
the
BLS
reported:

Nearly all the June increase is attributable to a 1.9% jump in margins for  final demand trade services. (Trade indexes measure changes in margins received by wholesalers and 
retailers.) The index for final demand services less trade, transportation, and warehousing inched up  0.1%.
This refers to the to the difference between the price retailers and wholesalers pay for goods and the price at which they sell those goods. 
A 1.9% jump in these margins means retailers and wholesalers are marking up their prices more significantly, it what looks like a one-off.
As a result, the US dollar quickly gave back its gains (shown here as the euro falling and then recovering).

Fed
cut
pricing
also
returned
to
62
bps
this
year,
which
is
slightly

higher
than
before
the
data.
A
brief
decline
in
stock
futures
also
reversed.