Dollar advances as rate differentials remain positive
Good morning. The dollar is trading on a stronger footing ahead of a producer price report that could lend further support. Firmness in the components that feed into the Federal Reserve’s preferred inflation measure—airfares, healthcare, financial services and insurance—might lift expectations for the core personal consumption expenditures deflator, due later this month, toward the 3.3% mark, reinforcing the case for tightening. Expectations for the Federal Reserve’s policy trajectory were ultimately left unchanged by yesterday’s inflation report. Sharply higher gas prices were the primary driver, with energy accounting for more than 60% of the monthly rise—enough to keep headline inflation moving...