FX Weekly: Dollar stabilises ahead of FOMC

The dollar has stabilised after its historic tumble last week, with the DXY index set to end broadly flat on the week. At the margin, the greenback was lifted by relatively hot CPI and PPI data this week, which we think point to a 0.35% rise in the core PCE deflator in February – twice the target-consistent rate. But that boost was probably partly offset by Germany’s historic debt deal nearing ever closer. And further weakness in the US stock market may also have undermined the dollar – the S&P 500 is on track for its fourth consecutive weekly decline, its joint-longest streak over the past couple of years.