Dollar Posts Weekly Gain as Rate Hike Bets Fall and Oil Prices Rise
TLDR
- The US Dollar Index edged lower Friday but is on track for a weekly gain
- US producer prices came in flat for July, cutting Fed rate hike expectations
- Markets now price only a 35% chance of a September Fed rate hike, down from 55%
- The Japanese yen is headed for a 1% weekly loss despite intervention support
- Oil prices are set for a 4% weekly jump after the US threatened an indefinite Iran naval blockade
The US dollar dipped slightly on Friday but remained on course for a weekly gain after a run of soft inflation data reduced the chances of a Federal Reserve rate hike in the near term.
The US Dollar Index fell 0.1% to around 99.82 on Friday morning. Despite the small daily drop, the index has held up well over the week.
Thursday’s producer price index report showed US wholesale prices were flat in July. That came after consumer prices rose 3.4% year-on-year, with core inflation easing to 2.5%.
Together, the data have pushed rate hike expectations lower. Markets now see just a 35% chance of a Fed rate hike at the September meeting, down from 55% a week ago, according to CME FedWatch.
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