Dollar Edges Up; US CPI to Determine Direction
The US Dollar Index hovered near the 99.9 level during Wednesday's trading (Aug 12), posting a slight gain as investors adopted a cautious stance ahead of the release of US inflation data.
Market attention is primarily focused on the US CPI data due today, followed by the PPI release on Thursday. Both datasets are expected to provide key clues as to whether inflationary pressures remain strong enough to prompt the Federal Reserve to raise interest rates.
Market opinion remains divided regarding the likelihood of a 25-basis-point rate hike in September. Recent increases in oil prices have reignited concerns that energy-driven inflationary pressures could persist, potentially compelling the Fed to maintain a hawkish stance.
Chicago Fed President Austan Goolsbee also emphasized that the central bank is currently more concerned about inflation remaining too high than about the risk of a weakening labor market. This statement helped bolster the dollar ahead of the CPI release.
On the geopolitical front, investors are closely monitoring US-Iran negotiations concerning the Strait of Hormuz. Sentiment improved briefly after Pakistan's Defense Minister stated that the two nations were nearing an agreement, although there is no certainty yet regarding the full reopening of the waterway.
Newsmaker Analysis: The DXY is currently hovering very close to the psychological 100 level. A higher-than-expected CPI reading could increase the probability of a September rate hike and push the dollar above that level. Conversely, a lower-than-expected CPI could weigh on yields and the dollar, while providing room for gold and other major currencies to strengthen. (gn)
Source: Newsmaker.id
