Dollar Bounces Back on Mixed Inflation Data, Canadian Dollar Continues Slide
The US dollar index rose 0.3% to 99.16 on Wednesday after mixed July inflation data kept currency market participants uncertain about the Federal Reserve's interest rate path.
Personal consumption expenditures (PCE) price index, a key measure of inflation preferred by the Fed, increased 0.2% month-over-month and 3.3% year-over-year in July, matching expectations.
The core PCE number, which excludes food and energy prices, held steady at 3.3% annual rise, significantly above the Fed's target of 2%. The Bureau of Economic Analysis (BEA) also reported unchanged US real GDP growth for Q2 at 1.5%, matching consensus estimates.
The PCE data gave the Fed more breathing room to keep interest rates steady while evaluating additional indicators. CME FedWatch tool showed odds of a rate hike in September rising to nearly 64% from about 60% a day ago.