Dollar Eases on Tame Inflation Data

2026-08-14 02:10 By Jam Kaimo Samonte 1 min. read

The dollar index fell to around 99.8 on Friday, sliding for the second straight session as subdued US inflation data prompted traders to dial back expectations for a Federal Reserve rate hike in September.

Data released Thursday showed US producer prices were unchanged in July, providing further evidence that price pressures are not broadly accelerating following Wednesday’s tame CPI report.

Moderating inflation reduces pressure on the Fed to raise interest rates in the near term, with markets now pricing in around a 35% chance of a 25 basis point rate hike in September, down from 55% a week earlier.

The latest figures also suggest that the initial inflationary impact of the Middle East conflict and higher energy costs may be fading.

However, uncertainty over a potential deal to end the wat and reopen the Strait of Hormuz continues to pose risks to the inflation outlook.



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Dollar Index Little Changed
The dollar index was little changed at around 101.6 on Friday, hovering near three-week lows and down nearly 0.2% on the week. Cautious sentiment persisted amid further gains in oil prices and concerns over a potential escalation of hostilities in the Middle East, while the US midterm elections are now less than two weeks away. Meanwhile, concerns over heavy AI-related spending continued to weigh on sentiment. The Fed is set to announce its monetary policy decision next week, with markets pricing in a roughly 91% probability of rates remaining unchanged. Meanwhile, the probability of a 25bps rate hike in December stood at around 76%. Among major currencies, the Japanese yen strengthened against the dollar, benefiting from its safe-haven appeal. The euro, by contrast, edged lower as political uncertainty in France and continued selling pressure in the country's bond market weighed on the common currency.
2026-10-23
Dollar Pressured by Lower Treasury Yields
The US dollar index hovered around 101.6 on Friday, remaining near a three-week low as Treasury yields fell sharply on safe-haven flows, pressuring the greenback. The benchmark 10-year Treasury yield dropped by more than 10 basis points to below 5% on Thursday, reaching a one-month low as a deepening selloff in technology and artificial intelligence stocks fueled demand for government bonds. Growing concerns over the sustainability of AI investments, a key driver of US economic growth, also prompted markets to reduce expectations for further Federal Reserve rate hikes. Markets are now pricing in roughly a 91% probability that the Fed will leave interest rates unchanged next week, while the likelihood of a rate increase in December stands at around 80%. The dollar suffered significant losses against the yen, which typically attracts safe-haven demand during periods of heightened market uncertainty.
2026-10-23
Dollar Little Changed at 3-Week Low
The dollar index traded little changed around 101.7 on Thursday, hovering near three-week lows as concerns over the sustainability of the AI trade mounted after earnings from several megacap companies failed to impress investors. Meanwhile, geopolitical tensions in the Middle East intensified, with reports suggesting that the US and Israel are preparing further strikes on Iran after the midterm elections. Risk aversion and safe-haven demand dominated markets on Thursday, supporting the Japanese yen and Swiss franc against the US dollar, while the euro was among the weakest-performing major currencies. Meanwhile, the Federal Reserve is set to announce its monetary policy decision next week. Markets are pricing in an approximately 89% probability that the Fed will leave interest rates unchanged, while the odds of a 25bps rate hike in December have risen to around 76%.
2026-10-22