US Dollar Index prints mild weekly gains around 95.50 on strong yields, focus on inflation

DXY struggles for clear direction, pares latest losses amid markets CPI-linked anxiety.

US Jobless Claims, Sino-American tussles and Russian headlines may also entertain traders.

Markets have high hopes from US CPI, which in turn pushes traders to remain cautious.

US Dollar Index (DXY) kick-starts the key day with a positive footing around 95.60 amid Thursdays Asian session.

In doing so, the greenback gauge tracks firmer US Treasury yields amid the markets anxiety ahead of the US Consumer Price Index (CPI) data, as well as cheer risks emanating from the US-China and Russia-Ukraine issues. Also contributing to the inflation fears are the latest comments from the White House and the Fed speakers.

US 10-year Treasury yields pause the previous days pullback from the highest levels since July 2019, up one basis point (bp) near 1.93% by the press time. The bond bears have recently dominated markets as inflation fears push the Fed towards a stark rate lift in March.

That said, the White House (WH) conveyed expectations of a higher YoY inflation figure while also saying, “Its irrelevant month on month number will continue trending lower the rest of the year.” Following that, WH Economic Adviser Brian Deese said that he sees reason to think that factors boosting inflation will moderate over time.

Moving on, Cleveland Fed President Loretta Mester supported the March rate hike while Atlanta Federal Reserve President Raphael Bostic told CNBC on Wednesday he is hopeful that they will start to see a decline in inflation. Feds Bostic also said, “Leaning toward the need for a fourth interest rate increase in 2022.”

Amid these plays, S&P 500 Futures remain indecisive despite Wall Streets upbeat performance on tech-rally and strong earnings whereas Asia-Pacific stocks also pare day-start gains.

Moving on, higher hopes from the US CPI for January, expected 7.3% YoY versus 7.0% prior, which in turn could give rise to the DXY‘s further advances on matching the forecasts, due to the hopes of a 0.50% rate hike by the Fed in March. However, any disappointment won’t be taken lightly.