FX.co ★ Dollar Holds Gains Ahead of PPI Report

The US dollar index remained above 98.5 on Wednesday, retaining a position close to its highest point in three weeks. Investors were keenly anticipating the latest release of the Producer Price Index, seeking to gauge the inflationary effects stemming from the tariffs imposed by the Trump administration. On the prior day, the dollar saw a boost after consumer inflation data presented mixed signals, prompting traders to reduce their expectations for any aggressive interest rate reductions by the Federal Reserve. Although overall inflation matched projections for both annual and monthly results, core inflation was softer than anticipated. Dallas Federal Reserve President Lorie Logan expressed a measured stance, suggesting that interest rates might need to stay at current levels for a while to mitigate inflation pressures linked to tariffs. As a result, market participants adjusted their expectations, with the likelihood of multiple rate cuts this year diminishing. The probability of a rate adjustment in September is now considered slightly above 50%.