Dollar Retreats Amid Soft US Inflation Data

The US dollar retreated against major currencies on Wednesday after data showed a smaller-than-expected increase in inflation. The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred gauge, rose 0.3% last month, lower than the forecasted 0.4%. This reduction in inflation has dampened market bets on an interest rate hike from the Fed.

The dollar had been strengthening alongside rising US Treasury yields due to expectations of more rate hikes driven by higher oil prices. However, the data release led to a decline in Treasury yields across the board, with the 2-year note yield falling 5.82 basis points to 4.831%.