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Dollar index slips below 100 as US PPI cools

Markets cut the odds of a September rate hike to 34.8% after July PPI came in softer than expected, pulling the DXY to about 99.9.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, a measure of the dollar against a basket of six currencies, eased to near 99.90 in Asian trading on Friday, after cooler US inflation data dampened expectations for additional Fed tightening, according to FXStreet.

Thursday’s Bureau of Labor Statistics report showed July producer prices were unchanged, versus a 0.2% increase expected and a revised 0.1% decline in June. Core PPI, excluding food and energy, rose 0.2% month over month, below the 0.3% forecast, while headline PPI climbed 4.7% year over year and core PPI rose 4.2% year over year.

The data bolstered views that the Fed could keep rates unchanged next month. FXStreet also noted that CME FedWatch pricing moved to a 34.8% chance of a rate hike at the September meeting, down from 40% immediately after the PPI release.

Separately, US initial jobless claims increased to 209,000 for the week ended August 8, above the prior reading of 200,000 and the 204,000 estimate. FXStreet cited Richmond Fed President Tom Barkin saying it remains an open question whether further tightening is needed to return inflation to target, or whether inflation is already moving down.

Latest closeDollar index 99.95 ▼0.1%

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