- In Thursday’s Asian session, the US Dollar Index is expected to remain stable around 97.85.
- The annual PPI inflation in the US came in lower than anticipated, bolstering arguments for potential Fed rate cuts.
- Traders are looking forward to the US August CPI inflation data, which is set for release in the latter part of Thursday.
The US Dollar Index (DXY), a measure of the dollar’s value against a group of six major currencies, will likely trade at about 97.85 during Thursday’s Asian session. Traders seem poised for the US Consumer Price Index (CPI) results, hoping for fresh insights later in the day.
There was an unexpected drop in the US producer price index (PPI), which has heightened expectations that the Federal Reserve might cut rates in the upcoming week. The PPI fell by 0.1% in August, contrasting with a previous 0.7% rise (revised from 0.9%), as reported by the US Bureau of Labor Statistics (BLS) on Wednesday. This figure was below the market expectation of a 0.3% increase. Year-over-year, the PPI increased by 2.6% in August, down from 3.3% in July.
In terms of core PPI, which excludes food and energy, there was also a monthly drop of 0.1% in August. The annual increase stood at 2.8%, falling short of analyst estimates of 3.5% after a rise of 3.7% in July.
Currently, the financial markets are fully anticipating a 25 basis point rate cut at the Fed’s September meeting, though the chances of a more significant 50 basis points reduction have now crept up to nearly 12%, based on the CME FedWatch tool.
The release of the US August CPI inflation report later Thursday will be closely scrutinized. If it comes in above expectations for inflation, it might give a short-term boost to the dollar.
