Dollar Holds Gains on Strong Economic Data

The dollar index traded above 99 on Thursday after advancing in the previous session, supported by stronger-than-expected US economic data that reinforced expectations for a Federal Reserve interest rate hike before year-end. The PCE price index rose 0.2% month-on-month in July, exceeding estimates of 0.1% and reversing a 0.1% decline in June, while annual inflation climbed to 3.7% versus 3.6% expected. Investors now await Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday for further clues, although he is unlikely to offer a clear indication of the central bank’s policy decision in September. Meanwhile, oil prices fell further amid signs of diplomatic progress in the Middle East, helping ease near-term inflation concerns. Investors also continued to weigh the implications of the US Treasury’s expanded debt buyback program and broader US fiscal risks.

The dollar index edged above 99 on Wednesday as investors assessed economic data and the outlook for Federal Reserve policy. Inflation-adjusted consumer spending was unchanged in July, while the PCE price index rose 0.2% month-on-month. Core PCE also increased 0.2% from the previous month and remained elevated at 3.3% year-on-year, well above the Fed’s 2% target. The data could reinforce expectations that policymakers will keep interest rates unchanged while monitoring whether inflationary pressures linked to the Iran war continue to ease. At the same time, oil prices fell for a third consecutive session, reducing inflation concerns. Now, investors await Fed Chair Kevin Warsh’s remarks at the Jackson Hole symposium on Friday for further guidance. Despite today's gains, the dollar remained near a three-month low, pressured by concerns over the Treasury’s expanded debt buyback programme and broader US fiscal risks.

The dollar index held steady near 99 on Wednesday as investors awaited the latest US PCE price index report, the Federal Reserve’s preferred measure of inflation. The data comes ahead of Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday, where he is not expected to provide clear guidance on the central bank’s policy decision in September. Meanwhile, the dollar remained near its lowest level in more than three months as investors continued to assess the implications of the Treasury Department’s expanded debt buyback program. Markets are concerned that the plan could provide only a temporary solution while reviving worries about the risks of a US debt crisis and further dollar weakness. Elsewhere, oil prices fell for a third straight session, easing inflation concerns and reducing safe-haven demand for the greenback.