Dollar index falls after softer US producer inflation
The dollar index fell to around 99.9 after US Producer Price Index data came in unchanged in July versus forecasts for a 0.2% increase, reinforcing expectations for a cautious Fed stance.
The dollar index fell to around 99.9 on Thursday after softer-than-expected US producer inflation eased concerns over renewed price pressures and strengthened expectations for a cautious Federal Reserve policy stance.
The Producer Price Index was unchanged in July, missing forecasts for a 0.2% increase, while recent consumer price data also pointed to moderating inflation.
As a result, traders increased bets that the Fed will leave interest rates unchanged at its September 15-16 meeting, with markets pricing around a 65% probability of a hold.
The latest figures suggest that the initial inflationary impact of the Middle East conflict and higher energy costs may be fading.
However, renewed tensions in the region continue to pose risks to the inflation outlook.
Meanwhile, weekly jobless claims increased but remained historically low, although recent employment data indicated that the US labor market has been weaker than previously estimated.