US Dollar Index (DXY) holds gains as markets await US CPI data
- The US Dollar Index holds gains around 99.00, supported by fresh Sino-US trade frictions.
- Trump threatened to curb a wide range of software exports to China.
- US Dollar rallies remain limited with investors awaiting the release of US CPI data.
The US Dollar weakness has been short-lived, and the USD Index is retracing on Thursday most of Wednesday’s losses, returning above the 99.00 level, as fresh trade frictions between the US and China have dampened risk appetite ahead of the release of the US Consumer Prices Index, due on Friday.
The USD Index, which measures the value of the Dollar against a basket of currencies, appreciates moderately on Thursday, as US President Donald Trump affirmed that he is considering restrictions on a wide array of software exports to China
Fresh trade tensions dampen risk appetite
Reuters reported on Wednesday that US authorities are working on a plan to curb imports of software-related products, from laptops to jet engines, in retaliation for the Chinese decision to restrict exports ot rare earths to the US and other Western countries.
This news has dampened risk appetite and provided a fresh impulse to the US Dollar, although rallies have been limited so far. Trump reiterated on Wednesday that he is optimistic about sealing a deal with the Chinese PM Xi next week, which will avoid these threats from coming into effect.
Meanwhile, market speculation that the new Japanese authorities would be preparing a USD 90 billion stimulus programme to help households cope with higher price pressures has hammered the Yen, increasing support for the Greenback.
US Dollar's upside attempts, however, remain limited, with investors looking from the sidelines ahead of the release of September’s US CPI data. Yearly inflation is expected to have accelerated above the 3% level, although the core CPI is seen growing at a steady 3.1% yearly rate, unchanged from the previous month.
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Fri Oct 24, 2025 12:30
Frequency: Monthly
Consensus: 3.1%
Previous: 2.9%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Economic Indicator
Consumer Price Index ex Food & Energy (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Fri Oct 24, 2025 12:30
Frequency: Monthly
Consensus: 3.1%
Previous: 3.1%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
