Meanwhile, the euro remained subdued at $1.1609, while sterling stabilized at $1.335 after recovering from losses on softer UK inflation data that increased expectations for a Bank of England rate cut.
At 15:30 GMT, DXY is trading 99.008, up 0.127 or +0.13%.
CPI Report in Focus as Fed Eyes Labor Market Over Inflation
Markets are looking to Friday’s rescheduled CPI data for clues on US economic momentum. The report—delayed due to the government shutdown—will inform Social Security cost-of-living adjustments and could influence short-term sentiment even though the Federal Reserve has shifted its focus toward labor market health.
Economists expect headline CPI to rise 0.4% month over month in September, with core CPI projected at 0.3%. Year-over-year, both metrics are forecast at 3.1%. Analysts attribute ongoing inflationary pressure to tariff-driven goods pricing, particularly in apparel and furnishings. However, falling mortgage rates are seen as a moderating force, likely easing shelter costs and dampening overall inflation.
Trade Frictions Reignite, Treasury Yields Tick Higher
US Treasury yields rose modestly as the market digested comments from Treasury Secretary Scott Bessent, who confirmed potential export restrictions on US software to China. The 10-year yield climbed to 3.995%, while the 2-year and 30-year yields also posted gains.
President Trump announced a scheduled meeting with Chinese President Xi Jinping, fueling speculation around possible retaliatory measures after Beijing’s rare-earth restrictions. Any escalation could weigh on risk appetite and reinforce safe haven demand for the dollar.
