The U.S. dollar maintained its position near a one-week high on Thursday as stronger-than-expected inflation data kept alive expectations for a Federal Reserve rate hike next month. The U.S. Dollar Index traded at 99.15 at 01:43 GMT, following a 0.3% gain in the prior session.
The U.S. Personal Consumption Expenditures price index rose 3.7% year-over-year in July, unchanged from June but above the 3.6% forecast. On a monthly basis, prices increased 0.2%, also exceeding expectations. Markets priced in roughly a 60% chance of a Fed rate hike at the September meeting, according to the CME FedWatch tool.
The Japanese yen held steady against the dollar, with the USD/JPY pair trading at 159.36. Traders assigned an 86% probability to a Bank of Japan rate hike next month, while Deputy Governor Ryozo Himino noted that timely adjustments could help curb inflationary pressures, though he did not signal a September move explicitly.
The South Korean won strengthened by 0.3% against the dollar, making it one of the top performers in Asian currencies. The move followed the Bank of Korea’s decision to raise its benchmark interest rate by 25 basis points to 3.00%, the second consecutive increase. The central bank also upgraded its 2026 growth forecast to 3.3% from 2.6%, while maintaining its inflation projection at 2.7%. It projected the policy rate would likely reach 3.25% by year-end.
The Australian dollar rose 0.2% to $0.718 after domestic consumer inflation data exceeded expectations, reviving bets on a potential rate hike by the Reserve Bank of Australia later in the year. The Chinese yuan remained flat against the dollar, while the Singapore dollar and Indian rupee saw modest declines and gains, respectively.
Investors are now turning their attention to the Federal Reserve’s annual Jackson Hole symposium, where further clues on monetary policy direction are expected.
