Dollar Stalls on Benign Inflation as Fed Hike Odds Fall

The dollar's advance stalled on Thursday after a benign US inflation reading sparked traders to reduce bets for a near-term Federal Reserve interest rate hike.

US consumer prices increased 0.1% in July, matching economists' expectations, leading money markets to lower the odds of a September rate hike to 40%, down from 54% last week.

Currency strategist Michael Wan at MUFG said the Fed is likely to maintain a restrictive policy stance in September rather than raising rates.

The dollar was little changed against the yen, but remained on course to gain about 1% this week following recent joint US-Japan intervention that saw it plummet to a three-month low.