Dollar Steadies as Fed Rate Hike Bets Slashed Amid Benign Inflation

The US dollar steadied on Thursday after a benign reading of consumer inflation in July. The data showed prices increased by 0.1% in July, meeting economist expectations.

This led to traders reducing their bets on a September rate hike from the Federal Reserve, with CME Group's FedWatch putting the odds at 40%, down from 54% a week ago.

The dollar is still up 0.4% this week against a basket of major currencies, but is heading for its first weekly gain in three weeks.

Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets, said the CPI print has given the market good reason to continue paring back Fed tightening expectations.