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US Dollar Index Struggles Below 99.00 as Inflation Data Looms
Confirmed
In Short: The US Dollar Index (DXY) is trading at a two-week low below 99.00 as traders await key inflation data, which could influence the Federal Reserve's policy path.
US Dollar Index (DXY) is struggling below 99.00, reaching a two-week low, as traders prepare for upcoming US inflation data, including the Producer Price Index (PPI) and Consumer Price Index (CPI), scheduled for release on Thursday and Friday, respectively. The index, which tracks the US dollar against a basket of currencies, has been under selling pressure for the second consecutive day, trading around 98.80.
USD/JPY is at six-month lows near 153.50 in the Asian session, supported by Japan's strong wage growth and Q2 GDP revision, which have increased bets on a Bank of Japan (BoJ) rate hike next week. The US Dollar Index remains capped by a dense overhead cluster, with rallies likely to face supply while staying below medium-term resistance levels.
Traders are closely watching the US inflation figures for more cues about the Federal Reserve's policy path, which could significantly impact the near-term trajectory of the US Dollar. The US Nonfarm Payrolls (NFP) report, released last Friday, increased the likelihood of a Fed rate hike at the September 15-16 meeting, amid inflation risks from elevated energy prices.
Meanwhile, geopolitical tensions and rising oil prices are fueling inflation concerns, affecting stock prices in London, where the FTSE 100 index closed down 8.96 points, 0.1%, at 10,822.13. The dollar is gaining on rates and geopolitical risk, even as US labor data lose momentum, with the US Dollar being the strongest against the New Zealand Dollar.
What's confirmed
What's still developing
- Know more. ) The table below shows the percentage change of US Dollar (USD) against listed major currencies this week.
- The index currently trades around the 98.80 region, down 0.10% for the day, though it manages to hold above a three-month trough, touched in August, as traders await this week's US inflation figures.
- The pair has risen steadily from the August 21 low of 1.3760 as renewed US dollar demand and trade tensions weigh on the loonie.
- That tension leaves the Fed balancing weaker job creation against persistent inflation pressure.
- Tariffs, supply disruptions and higher energy costs could keep prices elevated, while the global bond selloff has lifted rate expectations and supported the dollar.
- Stock prices in London closed slightly lower on Monday, as rising oil prices fuelled inflation concerns, while investors also digested UK Chancellor John Healey’s pledge to control public spending ahead of next month’s Budget.