The dollar index (DXY00) on Wednesday rose by +0.51%. The dollar recovered from early losses today and turned higher after US Feb producer prices rose more than expected, a hawkish factor for Fed policy. Also, signs of escalation in the Iran war knocked stocks lower and boosted liquidity demand for the dollar after Iran said it will target energy infrastructure in Saudi Arabia, Qatar, and the UAE in retaliation for US and Israeli airstrikes on its South Pars gas field and its Asaluyeh oil industry facilities. The dollar raced to its high on Wednesday afternoon when the FOMC raised its US 2026 GDP and inflation forecasts, and after Fed Chair Powell said there will be no Fed rate cut unless there is progress on inflation.
US Feb PPI final demand rose +0.7% m/m and +3.4% y/y, stronger than expectations of +0.3% m/m and +3.0% y/y. Feb PPI ex-food and energy rose +0.5% m/m and +3.9% y/y, stronger than expectations of +0.3% m/m and +3.7% y/y, with the +3.9% y/y gain the largest year-on-year increase in 13 months.
