Dollar edges higher after release of latest US economic data

The US dollar index (DXY) saw modest gains after the latest producer price index (PPI) and retail sales figures were published.

The report showed that October headline PPI numbers on a month-over-month and year-over-year basis came in below expectations. The ex-food and energy readings on a month-over-month and year-over-year basis were also cooler than forecast.

October retail sales month-over-month were slightly negative, but not as bad as anticipated. The ex-autos reading also exceeded estimates.

The new data adds to signs that inflationary pressures may be easing in the US economy. Investors have now priced out any chance of a Fed rate hike in December, while bets for a rate cut by May 2023 have risen to around 50%, according to the CME Group’s FedWatch tool.

The dollar’s fortunes will likely continue to sway based on shifting rate hike expectations going forward.