The Dollar was firm on Friday and on track to end a three-week losing run as hotter-than-forecast US inflation signalled a marginal rise in the risk Fed rate cuts may be delayed.
Thursday’s data revealed the US producer price index for final demand increased 0.6% last month, surpassing the 0.3% rise forecast by economists.
This followed on from Tuesday’s figures showing a robust rise in consumer prices for the second consecutive month in February.
The Fed is meeting next week, with investors focused on its interest rate forecast and comments from Fed Chair Jerome Powell.
Markets are now pricing in a 60% chance of a Fed rate cut in June compared to 74% last week, as per the CME FedWatch tool.
The inflation data underscores “the risk that the last mile on taming inflation in the US might not be as easy as progress made to date,” stated Ryan Brandham, head of global capital markets, North America, at Validus Risk Management.
“It could give the Fed even more reason to push back the timing of any interest rate cuts in 2024.”
The Dollar index, measuring the greenback against six peers, rose 0.068% to 103.45 at the time of writing, after edging up 0.55% on Thursday.
The index is on course for a 0.7% increase this week, the first weekly gain in four, Reuters reports.
Meanwhile, the yield on 10-year Treasury notes declined by 1.3 basis points to 4.285% after rising by 10.6 basis points on Thursday.
Elsewhere, the Euro declined 0.04% to $1.0875 on Friday, whilst Sterling eased 0.15% to $1.2735 ahead of the Bank of England’s policy meeting scheduled for next week. Both the single currency and the Pound were close to their lowest in a week at the time of writing.
In Australia the Aussie Dollar fell 0.18% to $0.6569, whilst the New Zealand Dollar edged down 0.53% to $0.6099.