USD Tumbles as Inflation Data Looms Large
The US Dollar Index (DXY) is trading near recent lows and below its 200-day moving average, according to Brown Brothers Harriman's Elias Haddad. He notes that the upcoming August Consumer Price Index (CPI) report will be a key driver for the Federal Reserve's (Fed) September 16 decision.
A stronger CPI print would likely secure a rate hike and support the Dollar, while a softer reading could trigger a dovish repricing and weigh on the USD. The PPI Services less Trade, Transportation, and Warehousing will be released tomorrow, serving as a warmup act to the pivotal August CPI report.
Haddad also cautions that portfolio management fees may distort the PPI data, but notes that the BEA's September 30 methodology change is poised to fix this issue. A hot CPI print would all but seal a September hike and underpin a firmer USD, while a cooler reading would strengthen the case for a hold and leave USD vulnerable to a dovish Fed repricing.