Dollar index on course to finish week slightly lower

The dollar index continues to linger around a seven week low on Friday, heading for a half percent decline for the week. Growing bets for a September rate cut are weighing on the greenback although safe haven demand amid rising tensions in Middle East is limiting downside in the currency. The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is recovering its recent losses and trading around 97.21 during the Asian hours on Friday, ahead of the release of the University of Michigan consumer sentiment index due later in the day. Meanwhile, US consumer price inflation rose 2.9% year-over-year in August, as expected, coming in higher than 2.7% in July. CPI inflation climbed to 0.4% month-over-month from a 0.2% increase. The core CPI, which excludes volatile food and energy prices, increased 3.1% on a yearly basis in August, matching the estimate. Meanwhile, US Initial Jobless Claims rose to 263K, the highest since 2021, against the expected 235K and 236K prior. Separate data yesterday showed that the Federal Budget Balance, a critical measure of the government’s financial health, has reported a deepening deficit, amplifying concerns over the nation’s fiscal stability. The actual figure for the reported month stands at -$345.0 billion, which is notably worse than the forecasted budget deficit of -$305.7 billion.