Dollar Index is approaching a critical support level as September Fed hike odds collapse from likely to roughly a two-in-three chance of a hold — not because tightening risk has disappeared, but because weaker jobs and softer consumer demand are limiting how far the Fed can realistically go.
The Canadian dollar's rally has accelerated sharply this week without help from oil, built instead on blowout GDP and jobs data — but whether this reflects genuine repositioning for a Bank of Canada hike or just a weak US Dollar remains unconfirmed.
USD/JPY's rebound from last month's intervention is stalling just below 160, as reports of an informal US-Japan understanding — support for the Yen in exchange for BoJ hiking room — reshape how traders read the months ahead.
Dollar slipped again after July PPI undershot expectations, reinforcing fading Fed hike bets, annual producer inflation slowed from 5.5% to 4.7% and September hold odds rose to near 70% from around 45% a week ago. At the same time, Brent's six-session, roughly 12% rally has stalled around the $90 level as US-Iran headlines stop supplying fresh reasons to extend the risk premium.