Dollar index weakens further on soft US inflation data

The dollar index continues to weaken under the 100 mark on Friday due to soft inflation data. Data released yesterday showed US core producer prices increased less than expected in July, reinforcing that inflationary pressures are not intensifying broadly after Wednesday’s subdued CPI report. However, uncertainty over efforts to end the conflict and reopen the Strait of Hormuz remains a key risk to the inflation outlook, potentially limiting downside in the safe-haven currency. Meanwhile, the 10-year US Treasury yield hovered around 4.65% on Friday, declining as softer-than-expected inflation data reduced expectations for a Federal Reserve rate hike in September. The dollar index, which measures the greenback against a basket of currencies, is currently quoting at 99.77, down 0.10% on the day. Among basket currencies, EUR/USD and GBP/USD are both marginally up due to DXY weakness.