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Dollar stays under pressure after softer US CPI and PPI data

ING says markets may keep just one Federal Reserve hike priced for this year, helping the dollar edge lower as other central bank expectations adjust.

Reported · Written up by our desk · Major Pairs

ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner said the US dollar remains under pressure following softer US CPI and PPI data, with FX volatility declining again after a brief bounce earlier this week.

They pointed to muted inflation readings, including headline PPI at -0.3% month over month and core PPI at 0.2% month over month, and said Brent around $85 per barrel is not yet pushing inflation expectations significantly higher.

The note also cited recent Fed communication, including two days of testimony by Fed Chair Kevin Warsh and remarks by Fed governor Chris Waller, who warned that markets should not overreact to a single inflation print and that the disinflation trend should be visible over several months.

ING added that, with retail sales for June due and the Fed’s Logan and Schmid scheduled to speak, markets may stay comfortable with one Fed hike priced for this year, a setup that could keep the dollar inching lower across most currency pairs.

Latest closeBrent $85.39 ▲0.8%

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