US Dollar Hovers Around 98.00 ahead of Initial Jobless Claims, CPI Data

The DXY is oscillating around 98.00 ahead of US inflation and Initial Jobless Claims. The risk-on impulse has brought a sell-off in the dollar index. Investors brace an aggressive tightening policy by the Fed.

The US dollar index (DXY) is hovering around 98.00 as investors await the US Consumer Price Index (CPI) numbers from the Bureau of Labor Statistics and the Initial Jobless Claims from the Department of Labor.

The DXY witnessed a stellar move in the last few trading sessions on rising uncertainty over the geopolitical tensions between Russia and Ukraine. The greenback-based index gained almost 4% from February 04. Fresh waves in the risk-aversion theme amid the volatile market were underpinning the greenback.

However, the volatile stance has been shifted to risk appetite and the DXY has been hammered by the market participants on Wednesday. Ukraine has agreed to the stipulations of Russian leader Vladimir Putin and is ready to compromise for a truce to halt the battering of its economy.

As a ceasefire is more likely on the cards, investors have shifted their focus on the monetary policy action by the Federal Reserve (Fed) next week. A 50-basis point (bps) interest rate hike has been underpinned against a quarter of a percent to address the soaring inflation.

The US economic calendar will report US CPI and Initial Jobless Claims, which will have a significant impact on the likely monetary policy action by the Fed next week. Likely higher US inflation from the Bureau of Labor Statistics will lift the odds of an aggressive interest rate decision going forward.

The US CPI numbers are likely to land at 7.9% against the prior figure of 7.5% while the estimates of Initial Jobless Claims are at 216K against the previous print of 215000.