NEW YORK: The US dollar rose on Friday after hotter-than-expected producer price data for January and on concerns about rising tensions between the United States and Iran.
The Producer Price Index for final demand rose 0.5 percent last month after advancing by a downwardly revised 0.4 percent in December. Economists polled by Reuters had forecast the PPI gaining 0.3 percent after a previously reported 0.5 percent increase in December.
“There’s a real deep unease in markets about inflation and growth so far in 2026,” said Adam Button, chief currency analyst at investingLive. “There’s this expectation that inflation will moderate, but it’s not showing up in the numbers.”
Underneath the headline number, however, there were signs of improvement, said Chris Low, chief economist at FHN Financial.
“While the PPI headline increase was alarmingly big, pressure came from trade services, a category the BLS notes is calculated in a way that does not capture true price changes in real time,” Low said in a report. “Otherwise, there is evidence of price moderation.”
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.06 percent to 97.79, with the euro flat on the day at USD1.1797.
The dollar index is headed for a 0.64 percent monthly gain, its first monthly increase since October. The euro is on track for a 0.42 percent loss, its first down month since October.
Against the Japanese yen, the dollar strengthened 0.03 percent to 156.16. The US currency is headed for a 0.9 percent gain against the yen this month.
The dollar was boosted earlier by a safety bid on concerns about a conflict between the US and Iran. The two countries made progress in talks over Tehran’s nuclear program on Thursday, mediator Oman said, but hours of negotiation ended with no sign of a breakthrough that could avert potential US strikes amid a massive military buildup. Oil prices rose about 3 percent on Friday as traders remained on alert for potential supply disruptions if relations worsen.
Overall market moves this week have been muted as traders gauge the geopolitical uncertainty along with the impact of new tariffs, after the US Supreme Court last week struck down US President Donald Trump’s emergency tariffs.
“The dollar has been trading in a little bit of a holding pattern. It feels like it’s waiting for its next real catalyst,” said City Index market strategist Fiona Cincotta.
The yuan took a breather from a 10-day rally after the People’s Bank of China moved to slow the pace of the rise. It said it would scrap the foreign exchange risk reserves for some forward contracts - seen as a way to encourage dollar buying.
Sterling fell 0.22 percent to USD1.3451, and was set to snap three straight months of gains with a 1.75 percent fall in February. A local election in Manchester on Thursday delivered a big victory to the Green Party and a blow to Prime Minister Keir Starmer’s Labour, whose popularity has slid sharply in the past year.
Sterling is sensitive to domestic politics, but with risk events ahead, such as next week’s budget update from finance minister Rachel Reeves, any volatility was contained.
In cryptocurrencies, bitcoin fell 2.30 percent to USD65,924.
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