The US Dollar Index climbed to 103.08, supported by hawkish Fed repricing and technical momentum, with traders eyeing Friday's PPI data for further direction.
The index posted a fresh 18-month high at 103.08 on Thursday and holds above the 10-week EMA at 101.69, with the article's chart analysis targeting the 7 April 2025 high at 103.54 and then 104.00. Fed repricing sparked by Waller's comments about a possible 50bp hike on 9th December is lending the dollar strength. RSI at 66.36 near overbought suggests upside momentum could slow.
The dollar outperformed all major peers except the yen on Thursday, gaining most against the Australian Dollar (0.25%), on fears the Fed could turn more aggressive against elevated inflation. Waller's remark that a stronger CPI print may warrant a 50bp hike has repriced December policy expectations, supporting the currency into Friday's PPI release.
The yen is the only major currency to outperform the dollar on Thursday, edging up 0.02% against the greenback and gaining against every other peer in the daily table. The article does not give a reason for the yen's strength, so the move may not persist.
The US Dollar Index reached a fresh 18-month high of 103.08 on Thursday as markets reprice the probability of a 50bp Federal Reserve rate hike on 9 December. This shift follows comments from Fed Governor Waller, who suggested that sticky inflation may warrant a more aggressive policy response. Investors are now focused on Friday's October Producer Price Index release, which carries a consensus forecast of 0.4%.
The chart analysis points to the 7 April 2025 high at 103.54 as the next target, followed by 104.00, after the index hit a fresh 18-month high at 103.08.
A strong US Producer Price Index reading for October, due Friday with consensus at 0.4%, plus the debate over a 50bp Fed rate hike on 9th December are the main supportive drivers mentioned.
Comments from Fed Governor Waller that a stronger CPI print may warrant a 50bp rate hike in December have made markets price in a more aggressive Fed, lending the dollar strength against all major peers except the Japanese Yen.
The US Producer Price Index for October, released Friday at 13:30, with consensus at 0.4% versus the previous 1.3%.