DXY Firms After Hot PPI

The dollar index remained above 97.7 on Friday and was largely unchanged for the week, supported by stronger-than-expected inflation that reinforced expectations the Federal Reserve will hold interest rates steady. January’s PPI rose 0.5% month-on-month, up from 0.4% in December and exceeding forecasts of 0.3%, signaling persistent price pressures. Jobless claims data showed both initial and continuing claims below expectations, pointing to a stable US labor market and solid worker retention. Money markets are projecting at least two rate cuts this year, with the first one fully priced in July. Investors also watched potential US tariff increases from 10% to 15% for some countries and ongoing US-Iran nuclear talks set to continue next week. The dollar is on track to finish the month 0.9% higher, ending a three-month losing streak.

The dollar Index held arounde 97.8 on Friday, trading sideways throughout the week as investors awaited upcoming inflation data that could shape Federal Reserve policy expectations. January’s PPI report is forecast to show wholesale inflation slowing to 0.3% month-on-month, down from 0.5% in December. Data on Thursday revealed that both initial and continuing jobless claims came in below forecasts, indicating a stable US labor market and ongoing employer retention of workers. The Fed is expected to keep rates on hold at least until June, as policymakers weigh elevated inflation against labor market risks. Investors also monitored uncertainties around US tariffs, following indications from the Trump administration that tariffs for some countries could rise from 10% to 15%, while the US and Iran agreed to continue nuclear negotiations next week. The dollar looks set to end the month higher, snapping a three-month losing streak.

The dollar index was little changed at 97.7 on Thursday, hovering not far from the one-month highs reached last week, as investors continued to await fresh catalysts after concerns over President Trump’s trade policies eased, though uncertainty still lingers. Sentiment was also weighed down by worries surrounding US-Iran talks. Meanwhile, both initial and continuing jobless claims came in below forecasts, signalling that the US labour market has stabilised and that employers are continuing to retain workers. At the same time, money markets have scaled back expectations for Federal Reserve rate cuts. The probability of a quarter-point reduction by June has fallen to 50%, the lowest level so far this year, while expectations of a third cut by year-end have all but faded.