FX.co ★ Dollar Holds Gains on Strong Economic Data

The dollar index traded above 99 on Thursday after rising in the previous session, bolstered by stronger-than-expected US economic data that reinforced expectations of a Federal Reserve interest rate hike before year-end. The PCE price index increased 0.2% month-on-month in July, beating forecasts of 0.1% and reversing a 0.1% decline in June, while annual inflation accelerated to 3.7% versus a 3.6% consensus. Investors are now looking to Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday for additional policy signals, though he is not expected to provide a definitive indication of the central bank’s September decision. At the same time, oil prices extended their decline amid signs of diplomatic progress in the Middle East, easing some near-term inflation concerns. Market participants also continued to assess the implications of the US Treasury’s expanded debt buyback program and the broader fiscal risks facing the United States.