The dollar index (DXY00) Friday rose by +0.36% and posted a 5-week high. The dollar moved higher Friday after the stronger-than-expected U.S. Jul PPI report boosted bond yields and bolstered speculation the Fed may raise interest rates higher and for longer. The dollar also garnered support from Friday’s slide in the Chinese yuan to a 1-month low after China’s credit growth slowed more than expected.
Friday’s U.S. Jul producer price report was hawkish for Fed policy and supportive of the dollar. Jul PPI final demand rose +0.8% y/y from +0.2% y/y in Jun, stronger than expectations of +0.7% y/y. Also, Jul PPI ex-food and energy was unchanged from Jun at +2.4% y/y, stronger than expectations of +2.3% y/y.
