Dollar steadies near 99.9 ahead of July PPI

The dollar index steadied around 99.9 on Thursday after experiencing heightened volatility in the previous session, as investors looked ahead to July’s producer inflation report for further clues on recent price trends.

Data released Wednesday showed US consumer inflation slowed for a second consecutive month to 3.4% in July, while rising just 0.1% from the previous month.

Markets now see around a 40% chance of a 25 basis point rate hike from the Federal Reserve in September, down from nearly 50% a day earlier.

Meanwhile, investors continued to assess prospects for a deal to reopen the Strait of Hormuz, although escalating rhetoric between the US and Iran amid deadlocked negotiations reduced the likelihood of an imminent agreement.

Elsewhere, traders remained alert for potential intervention to support the yen as the currency approaches the 160 level against the dollar.