Sticky US inflation data and improving labor demand support a firmer dollar ahead of May PPI release.
The US Dollar (USD) remains firm as recent data shows stalled disinflation, with key inflation measures drifting further from the Federal Reserve’s 2% target. Headline CPI rose to 4.2% year-over-year in May, the highest since April 2023, while core CPI held at 2.9%, though monthly gains slowed slightly.
Filtered inflation metrics, such as core services less housing and Atlanta Fed sticky CPI, continue to exceed the Fed’s goal. Analysts cite improving labor demand and a more restrictive Fed stance as drivers for potential USD gains.
Markets now focus on May Producer Price Index (PPI) data, particularly services components that influence core PCE inflation.