Dollar Holds Steady as Traders Await U.S. PPI and Retail Sales

The U.S. dollar and major currencies traded in narrow ranges on Thursday as traders waited for fresh U.S. economic data to clarify the Federal Reserve’s next policy move.

The Dollar Spot Index held near 100.03, while EUR/USD hovered around $1.1520 and GBP/USD traded near $1.3480. USD/JPY remained around 159.40, close to a two-week high, as traders continued to watch for possible Japanese intervention.

The subdued FX action followed Wednesday’s U.S. CPI report. Headline inflation slowed to 3.4% year on year in July, while core CPI eased to 2.5%. Combined with last week’s weaker nonfarm payrolls report, the data reduced expectations for a September Fed rate hike, with market-implied odds falling to around 40% from 67% last week.

Still, traders have little reason to sell the dollar aggressively. Elevated oil prices linked to continued uncertainty around the Strait of Hormuz could keep inflation pressures higher, particularly for major energy-importing economies in Europe and Asia.

The next test comes from the U.S. Producer Price Index (PPI) and retail sales data. PPI will offer another view of business cost pressures, while retail sales will show whether consumer demand remains resilient despite tighter financial conditions.

For Southeast Asian FX traders, these releases could be particularly important for USD/SGD, USD/MYR and USD/JPY. Until the data provide a stronger policy signal, major currency pairs may remain range-bound and sensitive to short-term headlines.