Dollar Gains Stall on Benign US Inflation Reading

The US dollar's recent gains stalled on Thursday after a benign inflation reading in the US spurred traders to reduce their bets for a near-term Federal Reserve interest rate hike.

US consumer prices rose 0.1% in July, meeting economists' expectations, which led money markets to lower the odds of a September rate hike to 40%, down from 54% last week, according to CME Group's FedWatch.

Currency strategist Michael Wan at MUFG said the primary dilemma for the Fed now lies in weighing inflation risks against a softening labor market, particularly after the weaker-than-expected July payrolls report released last Friday.