Dollar Steadies as US Inflation Data Reduces Rate Hike Bets

The US dollar steadied after a benign reading of US consumer inflation data on Wednesday, leading traders to pare back their bets on a September rate hike from the Federal Reserve.

The Consumer Price Index (CPI) increased 0.1% in July, matching economist expectations, and reduced the odds of a September rate hike to 40%, down from 54% a week ago, according to CME Group's FedWatch.

Fed Chair Kevin Warsh has indicated a more holistic approach to inflationary dynamics, but markets will continue to take their cue from CPI, PPI, and core PCE until further clarification is provided.

The dollar edged lower against the yen to around 159.3 yen, about 2.7% below late July's 40-year highs near 164 that sparked historic joint intervention by the United States and Japan.