Dollar at 15-month low as easing inflation firms rate peak bets

economictimes.indiatimes.com:

Federal Reserve was close to the end of its rate hike cycle due to easing inflation. The dollar index, which measures the U.S. currency against six major rivals, stood at 99.71 in early Asian hours, its lowest since April 2022.

The index is on course for its worst week since November. U.S. producer prices barely rose in June and the annual increase in producer inflation was the smallest in nearly three years, data showed on Thursday, a day after consumer prices rose modestly last month as evidence mounts that the world's largest economy had entered a phase of easing inflation.

«Markets are generally pretty pleasant with the lower inflation data, because lower inflation together with the still resilient labour market supports the narrative of a soft landing in the U.S. economy,» said Carol Kong, currency strategist at Commonwealth Bank Of Australia in Sydney. «But we still maintain our view that the U.S.

will enter recession later this year because of the impact of past and potentially future interest rate hikes.» Markets are pricing in a 92% chance of a 25 basis point hike from the Fed later this month, CME FedWatch tool showed, but no more for the rest of the year. Data on Thursday also showed that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating that the labour market remains tight even as job growth is slowing. Ryan Brandham, head of global capital markets, North America, at Validus Risk Management, said the data on weekly jobless claims and producer prices are supportive of the soft landing.