FX.co ★ Dollar Steadies as Inflation Data Eyed

The dollar index remained steady above 97.8 on Monday as market participants anticipated two crucial inflation reports scheduled for this week, which are expected to influence the immediate outlook for interest rates following last week’s disappointing employment data. The producer price index is set for release on Wednesday, with the consumer price index to follow on Thursday. The index saw a decline of approximately 0.5% on Friday after information revealed that U.S. nonfarm payrolls increased by only 22,000 in August, significantly below the July figure, which was revised upward to 79,000, and the market's expectation of 75,000. This suggests ongoing challenges in the labor market. The weak employment figures have bolstered dovish remarks from Federal Open Market Committee (FOMC) officials who have recently emphasized the importance of adjusting policies in response to a slowing economy and weakening job market. The market has nearly fully anticipated a 25 basis point reduction in the Federal Reserve's rate later this month, with some investors considering the possibility of a larger 50 basis point cut contingent on this week’s inflation data outcomes.