Weak inflation data dampens rate hike expectations as the US dollar hovers near a one-month low
智通财经2026/07/16 16:36- The US Dollar Index hovered around 100.50 on Thursday, close to the one-month low of 100.35 reached overnight, which is also the lowest since June 18. The US Producer Price Index for June unexpectedly fell, marking the largest month-on-month decline in 14 months, further confirming that inflation had already shown signs of easing before the escalation in the Middle East situation.
- Combined with previously weaker-than-expected June CPI and employment growth data, the market expectation for a Federal Reserve rate hike in July has plummeted from 45% at the start of the week to 11%. However, the market still believes there is a roughly even chance of at least a 25 basis point rate hike in September.
- Analysts have pointed out that a single month of mild data is unlikely to indicate a sustained slowdown in inflation, and the escalation in the Middle East is expected to limit the downside for the US dollar. On Thursday, oil prices rose for the fourth consecutive trading day, with Brent crude holding near a one-month high at $85.25 per barrel, as ongoing tensions in the Middle East continue to add upward pressure to the inflation outlook.
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