The US dollar index has continued to rise in recent days

On January 14, 2025, the U.S. Bureau of Labor Statistics released the U.S. Producer Price Index (PPI) data for December 2024. Data showed that in December 2024, the downward momentum of US inflation continued to decline after stagnating in recent months. The data triggered a swift reaction in markets, with the dollar index, which measures the greenback against six major currencies, falling significantly. Prior to this, the US dollar index had only fallen slightly on two trading days this year and rose on all the remaining trading days.

According to the U.S. Bureau of Labor Statistics, in December 2024, the U.S. PPI increased by 0.2% month-on-month, lower than the expected 0.3%; the year-on-year growth rate was 3.3%, which was the highest since February 2023, but also lower than market expectations. 3.4%. At the same time, the core PPI, which excludes food and energy prices, was flat month-on-month and increased 3.5% year-on-year, also lower than the expected increases of 0.3% and 3.8%.

Specifically, the unexpected cooling of the US PPI data that month was mainly due to the decline in food costs. Food prices fell 0.1%, with vegetable prices falling nearly 15%.

As the PPI data was lower than expected, the US dollar index fell rapidly in the short term after the data was released. As of the close, the U.S. dollar index fell 0.61% on the day and closed at 109.280 at the end of the foreign exchange market.

However, although the lower-than-expected PPI data caused short-term fluctuations in the US dollar index, in the long run, some analysts believe that this is unlikely to change the Fed’s view that it will not cut interest rates again before the second half of this year, so the US dollar may continue to rise. Stay strong for a while. Analysts at investment bank Jefferies said that while the data was important, it alone would not change the situation.