Dollar Halted by Benign US Inflation Data
The dollar's advance slowed down on Thursday as US inflation data came in lower than expected. The greenback's rise against major currencies was halted, and it remained flat at 100 on the dollar index.
US consumer prices increased by 0.1% in July, matching economists' forecasts. This led to a reduction in bets for a Federal Reserve interest rate hike, with odds now standing at 40%, down from 54% a week ago according to CME Group's FedWatch.
MUFG's Michael Wan stated that the Fed is likely to maintain a restrictive stance in September rather than raising rates. He noted that the primary dilemma for the Fed lies in balancing inflation risks against a softening labor market, particularly after last Friday's weaker-than-expected payrolls report.
The dollar-yen exchange rate was near 159.44 yen, close to the 160 level that some market participants see as a line in the sand following recent joint US-Japan intervention.