The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, strengthened during Wednesday’s Asian session, trading near 98.30. The move comes as fading expectations of aggressive Federal Reserve (Fed) policy easing—following a stronger US wholesale inflation print—lend support to the currency.
Earlier this month, weaker US employment data and subdued July CPI figures fueled speculation of a September rate cut. However, the hotter-than-expected Producer Price Index (PPI) release has tempered some of those expectations, allowing the dollar to recover ground.
According to the CME FedWatch tool, futures traders now assign an 86% probability of a September rate cut, compared with near-certainty last week. Markets are also pricing in roughly 54 basis points of total easing by year-end.
On the data front, the Commerce Department reported that US housing starts rose 5.2% in July to an annualized pace of 1.428 million, building on a 4.6% gain in June. Conversely, building permits fell 2.8% to 1.354 million, extending June’s slight downward revision.
Looking ahead, investors await the release of the Federal Open Market Committee (FOMC) minutes from the July 29–30 meeting. Focus will then shift to the Fed’s Jackson Hole Symposium on Friday, where markets expect key signals from Chair Jerome Powell. Any dovish tilt in his remarks could cap the dollar’s upside in the near term.
