DXY Rises After Hot PPI
The US dollar index (DXY) held above 97.7 on Friday (February 27th) after hotter-than-expected producer inflation data reinforced the view that the Federal Reserve will keep interest rates on hold for longer. Throughout the week, the dollar tended to move steadily, with the market awaiting additional signals on whether price pressures were truly easing or strengthening again.
Data showed that the PPI in January rose 0.5% (MoM), up from 0.4% in December and exceeding the consensus of 0.3%. This figure indicates that price pressures at the producer level remain persistent—making the "higher for longer" narrative relevant again and maintaining room for a faster interest rate cut.
On the labor front, the release of jobless claims showed that initial and continuing claims were below expectations, confirming that the US labor market remains relatively stable and companies are still likely to retain workers. The combination of tepid inflation and solid labor data adds to the Fed's reason to remain cautious.
In the interest rate market, money markets are now projecting at least two rate cuts this year, with the first "fully built-in" cut expected in July. Beyond macroeconomic factors, investors are also monitoring the potential increase in US tariffs from 10% to 15% for a number of countries, as well as the continuation of the US-Iran nuclear talks, scheduled to resume next week.
Monthly, the dollar is on track to strengthen by around 0.9%, potentially ending a three-month losing streak—signaling a more comfortable USD position amidst stubborn inflation and persistent global uncertainty.
Source: Newsmaker.id
