Dollar holds near multi-week highs as markets reassess inflation and await PPI
The US dollar was largely unchanged on Wednesday, hovering near multi-week highs as caution prevails following Tuesday’s inflation data.
Core consumer prices rose by 0.2% month-over-month in December, slightly below market expectations, while headline CPI increased by 0.3%, in line with forecasts.
On the labour market front, recent data offered a supportive signal. US private employers added an average of 11,750 jobs per week in the four weeks ending late December, marking the fifth consecutive period of job growth.
The figures did little to change current monetary policy expectations. Two interest rate cuts are still expected, although later in the year. Treasury yields remained relatively stable.
The currency could remain at risk as markets remain cautious in the face of concerns over central bank independence. The latter could prove consequential for the dollar’s medium-term outlook.
Attention now turns to today’s Producer Price Index release. The PPI data could help form a more complete view of inflation dynamics and could act as a catalyst for renewed volatility across currency and bond markets if it delivers a meaningful surprise.
