The dollar index (DXY00) is up +0.17% on support from today's +4.7 bp rise in the 10-year T-note yield, which supported the dollar's interest rate differentials. Also, today's +4% rally in WTI crude oil prices is hawkish for Fed policy and supportive of the dollar.
Today's US CPI report was in line with market expectations and roughly neutral for the dollar. The Feb CPI rose +0.3% m/m and +2.4% y/y, while the Feb core CPI rose +0.2% m/m and +2.5% y/y. Today's headline CPI report of +2.4% y/y was just 0.1 point above the 5-year low posted in April 2025, while today's core CPI of +2.5% y/y matched the 5-year low posted in the two previous months. Even though the CPI figures are at or near 5-year lows, they are still above the Fed's target of +2%. Moreover, inflation pressures will worsen in the coming months due to the recent spike in oil and fuel prices caused by the war in Iran.
