FX.co ★ Dollar Steadies Ahead of Key Inflation Data

The dollar index hovered near 98.8 on Thursday, halting its recent slide as investors awaited key inflation data that could influence the Federal Reserve’s next policy move. The US producer price index for August is due later today, followed by the consumer price index report on Friday. Additional major releases scheduled for today include weekly jobless claims and existing home sales.

Futures markets are currently assigning roughly a 60% probability to a 25-basis-point Fed rate hike next week, after stronger-than-expected labor market data bolstered the case for further tightening.

At the same time, Treasury yields climbed after the US Treasury announced it would buy back up to $6 billion in longer-dated securities—three times the typical amount. The move, however, fell short of some investors’ expectations, as many had anticipated a still larger increase in buybacks.

In commodities, oil prices rose as escalating tensions between the US and Iran heightened concerns about inflation and reinforced expectations for additional near-term rate increases.