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2026-07-16 11:00:13
[Weak Inflation Data Weighs on Rate Hike Expectations, Dollar Hides Near One-Month Low] 1. The dollar index hovered around 100.50 on Thursday, close to the one-month low of 100.35 reached overnight, the lowest since June 18. The US June producer price index unexpectedly fell, marking its largest month-on-month drop in 14 months, further confirming that inflation had eased before the escalation of tensions in the Middle East. 2. Combined with the previously weaker-than-expected June CPI and employment growth data, the market's probability of a Fed rate hike in July has plummeted from 45% at the beginning of the week to 11%. However, the market still considers the probability of at least a 25 basis point rate hike in September to be 50/50. 3. Analysts pointed out that a single month's cooling data is unlikely to indicate a continued slowdown in inflation, and the escalation of tensions in the Middle East should limit the downside potential of the dollar. Oil prices rose for the fourth consecutive trading day on Thursday, with Brent crude remaining near a one-month high at $85.25 per barrel, as continued tensions in the Middle East continued to put upward pressure on the inflation outlook.
