Dollar Softens as Fed Repricing Continues

The US Dollar (USD) is trading on a softer footing as expectations of Federal Reserve rate hikes have been scaled back following weaker labor data and a mixed United States Producer Price Index report.

This shift in expectations has led to declining short-term US yields, yet the Dollar index remains above its 200-day moving average at around 99.200.

MUFG's Lee Hardman notes that the slowdown in private employment and wage growth, along with limited evidence of higher energy prices spilling over into core inflation since the US-Iran conflict started, provides more leeway for the Fed to leave rates on hold.