Dollar Holds Steady Amid Rate Cut Speculations

The dollar stabilized during early Asian trading on Thursday, reacting to an unexpected fall in U.S. factory-gate prices. This development has strengthened the belief that the Federal Reserve will implement a rate cut in its next session, prompting traders to focus on forthcoming U.S. consumer price data.

The dollar index rose to 97.822, marking its third day of gains, after the Producer Price Index decreased by 0.1% in August. This decline, reported by the Labor Department's Bureau of Labor Statistics, follows a previous and revised downturn from July. Rodrigo Catril, a currency strategist at National Australia Bank in Sydney, indicated that the market has already positioned for a likely Fed easing this September.

Market expectations largely hinge on an imminent Fed rate cut, with traders predicting a minimum reduction of 25 basis points, considered nearly certain, and only an 8% chance of a 50 basis-point cut. Meanwhile, in U.S. politics, developments such as the potential ouster of Federal Reserve Governor Lisa Cook and Stephen Miran's nomination are closely monitored, as they could significantly impact monetary policy directions.