Dollar Rebounds After PPI Release

The dollar index gave up early losses to trade around 105 on Friday, after fresh PPI data showed producer prices in the US rose more than expected last month.

Although markets already priced in a smaller 50bps rate hike by the Fed next week, expectations around the terminal fed funds rate which currently hovers around 5% could change as inflation remains elevated.

Attention now turns to CPI data due next week.

So far this month, the green back lost 1% and is down more than 7% from a 20-year peak of 114.1 reached in September, amid prospects that other central banks namely the ECB and the BoE will tighten faster than initially expected while China eased some covid curbs.