“There is deep unrest in the markets so far about inflation and growth in 2026,” said Adam Button, chief currency analyst at InvestLive. “There is an expectation that inflation will moderate, but that is not reflected in the figures.”Below the headline figure, however, there were signs of improvement, said Chris Low, chief economist at FHN Financial. “While the PPI increase was alarmingly large, the pressure came from trading services, a category that the BLS says is calculated in a way that does not reflect true price changes in real time,” Low said in a report. “Otherwise there are indications of price moderation.”
DOLLAR MAINTAINS FIRST MONTHLY PROFIT SINCE OCTOBER
The dollar index, which measures the greenback against a basket of currencies including the yen and euro, fell 0.12% to 97.61, while the euro rose 0.18% to $1.1818.
The dollar index is on track for a monthly gain of 0.47%, the first monthly increase since October. The euro is on track for a loss of 0.25%, the first month of decline since October.
Against the Japanese yen, the dollar weakened 0.1% to 155.95. The US currency is heading for a rise of 0.78% against the yen this month.
The US Federal Reserve is expected to leave interest rates unchanged until at least June due to concerns about high inflation.
But traders are pricing in 62 basis points of cuts by year-end on concerns about a weakening labor market.
The dollar was also previously boosted by security bids following concerns about a conflict between the US and Iran. The two countries made progress Thursday in talks over Tehran’s nuclear program, mediator Oman said, but hours of negotiations ended without any sign of a breakthrough that could avert potential U.S. attacks amid a massive military buildup. Oil prices rose about 2% on Friday as traders remained alert to possible supply disruptions if conditions deteriorate.
Overall market movements this week have remained subdued as traders assess geopolitical uncertainty and the impact of new tariffs after the US Supreme Court last week struck down US President Donald Trump’s emergency tariffs.
“The dollar is trading in a bit of a holding pattern. It feels like it’s waiting for its next real catalyst,” said City Index market strategist Fiona Cincotta. The yuan took a breather after a 10-day rally after the People’s Bank of China took measures to slow the pace of its rise. The central bank said it would eliminate currency risk reserves for some futures contracts, seen as a way to encourage dollar buying.
Sterling weakened 0.02% to $1.3478 and was set to post three consecutive months of gains with a 1.53% decline in February. A local election in Manchester on Thursday delivered a major victory for the Green Party and a blow to Prime Minister Keir Starmer’s Labor Party, whose popularity has plummeted in the past year.
Sterling is sensitive to domestic politics, but with risky events ahead, such as next week’s budget update from Chancellor of the Exchequer Rachel Reeves, any volatility has been contained.
In cryptocurrencies, Bitcoin fell 3.08% to $65,399.
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