The is trading steady as markets brace for a cluster of data that could reshape expectations for policy. The dollar index is flat at 97.911 after touching a four-week high of 98.074 on Thursday, reflecting a market that has paused ahead of fresh signals on and growth. At 13:30 GMT, investors will receive the Fed’s preferred inflation gauge, the , alongside advance fourth-quarter economic growth figures. The flash S&P survey follows at 14:45 GMT, adding another real time read on business conditions. Together, these releases arrive at a moment when the policy outlook remains unsettled.
The latest , published Wednesday, revealed a divided committee, with some policymakers open to raising rates again if inflation remains elevated. That shift in tone has already tempered confidence in near-term rate cuts and helped lift the dollar toward its recent high. The current level of 97.911 suggests positioning is cautious rather than directional, as traders weigh the possibility that firm inflation or resilient growth could push back easing expectations. Conversely, softer readings would likely revive the case for rate reductions and limit further upside in the dollar.
The base case is that incoming data confirms moderation in inflation and steady but unspectacular growth, allowing the Fed to remain patient while keeping the dollar supported near current levels. The risk scenario is that inflation surprises to the upside, reinforcing the hawkish minority within the Fed and driving the DXY back toward or above 98.074 as markets reprice the path of policy. For investors, the immediate focus is whether today’s data resolves the policy ambiguity reflected in the minutes or deepens it, as the answer will determine whether the dollar consolidates or resumes its advance.
