DXY Locks in Direction, US Wholesale Inflation Poised to Shake Things Up
The US dollar index (DXY) held steady around 97.8 on Friday, continuing its sideways trading pattern throughout the week as market participants awaited the release of inflation data that could potentially alter Federal Reserve policy expectations. Markets expect the January PPI to show a slowdown in wholesale inflation to 0.3% (MoM), down from 0.5% in December.
On the labor front, data released Thursday showed initial and continuing jobless claims below expectations, indicating the labor market remains solid and companies are still inclined to retain workers. This condition reinforces the view that the Fed still has room to be cautious.
With inflation still considered high, the market expects the Fed to hold interest rates at least until June, while balancing inflation risks with a potential economic slowdown. Therefore, the PPI release is an important catalyst to gauge whether price pressures at the producer level are truly starting to ease.
Beyond data, investors continue to monitor uncertainty surrounding US tariffs after signals emerged that tariffs for several countries could potentially increase from 10% to 15%. Furthermore, the US and Iran's agreement to resume nuclear negotiations next week also keeps the market wary of geopolitical risks.
On a monthly basis, the dollar has the potential to close this period stronger, ending a three-month weakening trend—but its future direction remains highly dependent on inflation signals from the PPI and subsequent price data. (asd)
Source: Newsmaker.id
