Dollar Rises as US CPI Meets Expectations, Fed Rate Hike Odds Trimmed
The US dollar gained on Wednesday after the Consumer Price Index (CPI) met economists' expectations in July, despite traders pushing back their expectations for a Federal Reserve rate hike.
According to the data released by the Bureau of Labor Statistics, the CPI increased 3.4% in the 12 months through July, down from 3.5% in June. The core CPI also rose 2.5%, down from 2.6% in June.
Traders have trimmed their bets on a rate increase at the Federal Reserve's September meeting since Friday's jobs report showed employers unexpectedly shed jobs in July. Fed funds futures traders now price in 40% odds of a September rate hike, down from 44% before Wednesday's data and from 55% a week ago.
Mark Chandler, chief market strategist at Bannockburn Global Forex, said the dollar 'really didn't go anywhere' after the soft jobs data on Friday. However, he noted that the greenback has been boosted by higher oil prices as traders focus on discussions to open the Strait of Hormuz.
The dollar index rose 0.17% to 99.98, with the euro down 0.14% at $1.1524. The Japanese yen weakened 0.1% to 159.45 per dollar.