Dollar Reaches New High Despite Soft Inflation Data

The US Dollar has continued its upward momentum, reaching a new high of around 101.80 on the Dollar Index. This comes despite softer inflation data, with revised core PCE figures showing slower underlying price pressures.

According to Lee Hardman from MUFG, the dollar's strength is due in part to the Fed's willingness to take its time to review additional data before tightening policy further. New York Fed President Williams has stated that 'there is no need for urgency' following this month's rate hike, and they can afford to wait.

The release of softer US inflation data has provided some reassurance that there has been progress towards meeting the Fed's inflation goal. However, this may not be as quickly as desired, making it less likely that the Fed will hike rates as aggressively as currently priced into the market.