US Dollar: CPI and Fed path guide Greenback – BBH

Brown Brothers Harriman (BBH) Elias Haddad highlights that the US Dollar Index (DXY) is trading just above recent lows and below its 200-day moving average, with the upcoming United States (US) August Consumer Price Index (CPI) seen as the key driver for the Federal Reserve’s (Fed) September 16 decision. He notes a stronger CPI would likely secure a rate hike and support the Dollar, while a softer print could trigger a dovish repricing and weigh on USD.

Key US inflation data in focus

"The USD index (DXY) is directionless just above recent lows and holding under its 200-day moving average (99.14). Tomorrow’s US August CPI report remains the main near-term market driver that will decide the Fed’s September 16 rate decision."

"The US August PPI (1:30pm London, 8:30am New York) will serve as a warmup act to the pivotal August CPI report. Watch out for PPI Services less Trade, Transportation, and Warehousing as it partially feeds into the policy-relevant PCE calculation."

"Portfolio management fees could again distort PPI, although the BEA’s September 30 methodology change is poised to fix that."

"A hot CPI print would all but seal a September hike and underpin a firmer USD. A cooler reading would strengthen the case for a hold and leave USD vulnerable to a dovish Fed repricing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)