Dollar Slips on Dovish US CPI Report, Yen Benefits
The US dollar index (DXY) slipped 0.08% as expectations for a Fed rate hike eased following today's favorable CPI report.
The July US Consumer Price Index (CPI) report was exactly in line with market expectations, showing an annual increase of 3.4%, down from June's 3.5%. The core CPI also eased to 2.5% from June's 2.6%.
The risk of a renewed flare-up across the Middle East remains high, driving safe-haven demand for the dollar. However, the markets are discounting a 37% probability of a +25 bp rate hike at the next FOMC meeting on September 15-16, down from 51% on Tuesday.
The yen benefited from today's weak US CPI report and reduced expectations for a Fed rate hike, with EUR/USD trading down 0.15%. October COMEX gold prices rose +1.02%, while September COMEX silver prices increased by +2.18% as precious metals saw support from the mild decline in the dollar.