The dollar index stabilized around 105.9 on Wednesday, holding near its highest level in over six months. Investors were on edge ahead of the October Consumer Price Index report, which could impact expectations for future Federal Reserve rate cuts.
Dollar index steady ahead of inflation figures
Traders also looked forward to the producer price index report on Thursday and retail sales data on Friday. In addition, investors closely monitored the latest Fed commentary, with Chair Jerome Powell scheduled to speak on Thursday. The dollar continued to benefit from the so-called 'Trump trades,' as markets anticipated strong US economic growth and inflationary policies under a second Trump presidency.
Markets price 60% chance of 25 bps cut
This scenario would limit the Fed's ability to lower interest rates. Currently, markets are pricing in a 60% chance of a 25 basis point rate cut in December, down from 84.4% a month ago. The dollar remained robust against most major currencies, particularly the euro, which fell to a one-year low.
