Dollar stays higher as US data lifts rate-hike outlook

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.