The dollar index slipped to around 99.9 on Thursday after weaker-than-expected US producer inflation eased concerns about renewed price pressures and reinforced expectations for a cautious Federal Reserve. The Producer Price Index was flat in July, undershooting forecasts for a 0.2% increase, while recent consumer price data also signaled moderating inflation.
In response, traders increased wagers that the Fed will keep interest rates unchanged at its September 15–16 meeting, with futures markets now implying roughly a 65% probability of a hold. The latest data suggest that the initial inflationary shock from the Middle East conflict and higher energy prices may be dissipating.
Even so, renewed tensions in the region continue to pose upside risks to the inflation outlook. Elsewhere, weekly jobless claims rose but remained low by historical standards, though recent employment figures indicate the US labor market has been weaker than previously estimated.
