- The US Dollar Index is expected to decline during Friday’s Asian session.
- The Producer Price Index (PPI) in the US rose more than anticipated in July.
- Market participants are looking forward to the July retail sales data being released on Friday.
The US Dollar Index (DXY), which measures the dollar’s performance against a group of six major currencies, is anticipated to trade at around 98.15 in the Asian session on Friday. This dip could be influenced by predictions of an interest rate cut by the Federal Reserve in September. Additionally, the retail sales numbers for July will be made public later on Friday, along with an early reading of the University of Michigan’s Consumer Sentiment Index.
Recent data from the U.S. Bureau of Labor Statistics indicated that the Producer Price Index (PPI) increased by 3.3% on a year-over-year basis in July, significantly above the expected 2.5%. The annual core PPI went up by 3.7%, even though it was anticipated to be 2.6%, having been noted at 2.9% in June.
In other news, initial US jobless claims for the week ending August 9 fell to 224,000, adjusted from 226,000, which was below the market expectation of 228,000. A strong performance in US economic indicators encourages some demand for the dollar.
However, many traders are leaning towards the notion that the Fed will lower rates in its September meeting. This anticipated rate reduction might further diminish the DXY value. According to the CME FedWatch tool, futures traders are currently estimating an 85% probability of a rate cut next month, specifically a 25 basis point reduction.
On Friday, the retail sales report will provide additional insights, with expectations set for a 0.5% increase in July. If the data surpasses predictions, it could help mitigate any losses the DXY might face in the near term.
(This update was last revised at 02:35 GMT on August 15 and originally indicated a drop in the US dollar index to nearly 98.00 due to retail sales data, rather than the PPI.)
