Dollar steady! Inflation data and Fed policy in focus
2025-09-11 10:22:29
The US dollar index held steady around 97.83 in early Asian trading on Thursday (September 11) after an unexpected drop in US factory prices strengthened market expectations that the Federal Reserve will cut interest rates next week. The market is awaiting the US Consumer Price Index (CPI) to be released later on Thursday.
Data from the U.S. Department of Labor's Bureau of Labor Statistics on Wednesday showed that the final demand producer price index fell 0.1% in August, while the 0.7% increase in the index in July was also revised down.
Rodrigo Catril, a foreign exchange strategist at National Australia Bank in Sydney, said: "The market has already positioned itself for a September rate cut by the Federal Reserve and expects three rate cuts this year. The mild performance of the PPI data shows that the pricing expectations are basically accurate."
Markets are trading on the expectation that the Federal Reserve will ease monetary policy, with the only remaining uncertainty being the extent of the rate cut . According to the CME Group's FedWatch tool, the market is pricing in an 8% probability of a 50 basis point rate cut at the Fed's September meeting, while a cut of at least 25 basis points is considered a fait accompli.
Appointments to the Federal Reserve's rate-setting committee remain closely watched. The Trump administration on Wednesday appealed a federal judge's ruling that temporarily blocked his unprecedented move to fire Fed Governor Lisa Cook.
The White House is trying to remove him from his post before the Federal Reserve's rate-setting meeting next week, and Stephen Milan is one step closer to taking a seat on the Fed's board of governors, furthering Trump's efforts to gain more direct control over interest rate policy.
The Senate Banking Committee voted to approve Milan’s nomination, but lawmakers said it was far from certain whether the process could be completed in time for her to participate in the Federal Reserve’s Sept. 16-17 policy meeting.
US dollar exchange rate
The dollar was flat against the yen at 147.37 yen after data showed that wholesale prices in Japan rose 2.7% in August from a year earlier, accelerating the previous month and suggesting continued inflationary pressures in the world's fourth-largest economy.
The euro rose slightly against the dollar to 1.1699. The European Central Bank is widely expected to keep interest rates unchanged at its policy meeting. Some economists believe policymakers may adopt a more dovish stance in response to the dire trade and political outlook on the European continent. The euro is recovering from two consecutive days of losses as geopolitical tensions continue to loom on the EU's eastern border. Poland, backed by NATO allies, shot down a suspected Russian drone on Wednesday, the first public shooting action by a member of the Western military alliance during the Russia-Ukraine conflict.
The Australian dollar was trading at 0.6617/18 against the U.S. dollar, up about 0.1% in early trading. Boosted by gains in commodities such as iron ore, crude oil and gold, the Australian dollar hit its highest level since November last year on Wednesday, with gold prices nearing a record high.
The New Zealand dollar rose 0.12% to 0.5944 against the US dollar, and the British pound was at 1.3530 against the US dollar, basically unchanged on the day.
(Daily chart of the US dollar index, source: Yihuitong)
At 9:45 Beijing time, the US dollar index was at 97.79.
Data from the U.S. Department of Labor's Bureau of Labor Statistics on Wednesday showed that the final demand producer price index fell 0.1% in August, while the 0.7% increase in the index in July was also revised down.
Rodrigo Catril, a foreign exchange strategist at National Australia Bank in Sydney, said: "The market has already positioned itself for a September rate cut by the Federal Reserve and expects three rate cuts this year. The mild performance of the PPI data shows that the pricing expectations are basically accurate."
Markets are trading on the expectation that the Federal Reserve will ease monetary policy, with the only remaining uncertainty being the extent of the rate cut . According to the CME Group's FedWatch tool, the market is pricing in an 8% probability of a 50 basis point rate cut at the Fed's September meeting, while a cut of at least 25 basis points is considered a fait accompli.
Appointments to the Federal Reserve's rate-setting committee remain closely watched. The Trump administration on Wednesday appealed a federal judge's ruling that temporarily blocked his unprecedented move to fire Fed Governor Lisa Cook.
The White House is trying to remove him from his post before the Federal Reserve's rate-setting meeting next week, and Stephen Milan is one step closer to taking a seat on the Fed's board of governors, furthering Trump's efforts to gain more direct control over interest rate policy.
The Senate Banking Committee voted to approve Milan’s nomination, but lawmakers said it was far from certain whether the process could be completed in time for her to participate in the Federal Reserve’s Sept. 16-17 policy meeting.
US dollar exchange rate
The dollar was flat against the yen at 147.37 yen after data showed that wholesale prices in Japan rose 2.7% in August from a year earlier, accelerating the previous month and suggesting continued inflationary pressures in the world's fourth-largest economy.
The euro rose slightly against the dollar to 1.1699. The European Central Bank is widely expected to keep interest rates unchanged at its policy meeting. Some economists believe policymakers may adopt a more dovish stance in response to the dire trade and political outlook on the European continent. The euro is recovering from two consecutive days of losses as geopolitical tensions continue to loom on the EU's eastern border. Poland, backed by NATO allies, shot down a suspected Russian drone on Wednesday, the first public shooting action by a member of the Western military alliance during the Russia-Ukraine conflict.
The Australian dollar was trading at 0.6617/18 against the U.S. dollar, up about 0.1% in early trading. Boosted by gains in commodities such as iron ore, crude oil and gold, the Australian dollar hit its highest level since November last year on Wednesday, with gold prices nearing a record high.
The New Zealand dollar rose 0.12% to 0.5944 against the US dollar, and the British pound was at 1.3530 against the US dollar, basically unchanged on the day.
(Daily chart of the US dollar index, source: Yihuitong)
At 9:45 Beijing time, the US dollar index was at 97.79.
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