FX.co ★ Dollar Edges Higher as Inflation and US-China Trade Deal Take Center Stage

The dollar index experienced a modest increase to 98.4 on Monday, bouncing back from the lows observed last Friday as traders geared up for the crucial inflation data set to be released tomorrow. Expectations for July's inflation indicate a 0.2% rise, slightly under June's 0.3% increase, with the annual rate anticipated to climb for the third month in a row to 2.8%. The Core Consumer Price Index (CPI) is also projected to accelerate to a 0.3% increase. Despite the ongoing inflationary pressures, market forecasts suggest an 88% likelihood of a 25 basis point Federal Reserve rate cut next month, with expectations of another rate reduction fully factored in by the end of the year. Market participants are also monitoring developments in the US-China trade negotiations, with a general consensus leaning towards the announcement of another 90-day extension to continue talks. Meanwhile, attention shifts to the forthcoming meeting on Friday between Presidents Trump and Putin, focusing on finding a solution to the Ukraine conflict. Additionally, a series of important economic data releases—including the Producer Price Index (PPI), retail sales, and industrial production—are set to attract interest, along with any changes in the Federal Reserve's board or political pressures emanating from the US administration.