US Dollar Index softens below 100.00 as PPI data dampens Fed hike odds

What happened

The US Dollar Index (DXY) trades near 99.90 in Asian trading hours on Friday after weakening due to cooler US inflation data. The US Producer Price Index (PPI) remained unchanged in July, below the 0.2% consensus, while core PPI rose 0.2% MoM. Markets now price a 34.8% chance of a US rate hike at the September meeting, down from 40%. Initial Jobless Claims rose to 209,000 for the week ended August 8.

Why it matters

Softer-than-expected PPI data and rising jobless claims reduce the likelihood of a Federal Reserve rate hike next month. Fed Richmond President Tom Barkin stated it remains an 'open question' whether further tightening is needed, adding to policy uncertainty.