The dollar index firmed up around 102.5 on Thursday, remaining in a tight trading range, as investors brace for US inflation data that could guide the Federal Reserve’s rate hike timeline. The US consumer price index for May due out on Friday is expected to have gained 5.9% on the year, after an annual rise of 6.2% in April, based on consensus forecasts. While markets have priced in another half-percentage point rate increases for both June and July, a high inflation reading would bolster expectations of further tightening in the second half of the year. Meanwhile, investors remained cautious ahead of the European Central Bank meeting later on Thursday where it is expected to at least lay the groundwork for rapid rate rises, if not begin them with a small hike.
