The US dollar stabilized after a multi-day rally reached a three-week high, as investors awaited June's Producer Price Index. The dollar strengthened following the CPI report, though core inflation was softer than expected while both core and headline data rose monthly. This prompted markets to reassess potential Federal Reserve rate cuts. Dallas Fed President Lorie Logan indicated that rates should remain on hold to mitigate inflationary pressures from tariffs. Elevated Treasury yields, coupled with political pressure on the Fed, create uncertainty in future monetary policy.
The US dollar stabilized after a multi-day rally that took it to a three-week high, as investors await June's Producer Price Index for inflation insights.
On Tuesday, the dollar strengthened with both core and headline inflation data rising on a monthly basis, prompting reassessment of the Federal Reserve's rate cut pace.
Dallas Fed President Lorie Logan suggested that rates should remain on hold to contain inflationary pressure stemming from tariffs, highlighting the cautious approach of the Fed.
Political pressure on the Fed is increasing, with President Trump criticizing Chair Powell and linking cost overruns to potential dismissal, raising speculation about leadership changes.
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