DOLLAR INDEX PULLS BACK TO ONE-WEEK LOW DESPITE HIGHER THAN EXPECTED US INFLATION READING

Published on Feb 13, 2025 11:40

The dollar index has been on falling since the start of the week from its recent highs and is seen extending downside on Thursday despite a higher than expected US inflation reading. Hawkish tone by Powell and higher consumer prices data is supposed to drive dollar higher. The US Consumer Price Index (CPI) climbed above 3% annually for the first time in six months, exceeding forecasts and December�s 2.9% increase. This rise underscores the ongoing challenge for the Federal Reserve in controlling sticky inflation. Core CPI which excludes volatile items rose by 3.3% on year, up from 3.2%, above forecasts of 3.1%. Moreover, yield on the benchmark 10-year US government bond is at over 4.6% which should have acted as a tailwind for the greenback. Also, Trump�s presidency that was expected to strengthen demand for the US dollar is seen acting otherwise on likelihood of a possible negative repercussion for the US economy that could leave investors shed dollar for better prospects. Notable rise in EURUSD and GBPUSD , both up around 0.40% today are seen weighing down on the index. The US dollar index that measures the greenback against a basket of currencies is quoting at 107.45, down 0.35% on the day and at a near one-week low. Investors now look forward to Thursday`s US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data later on.