Dollar Stumbles Ahead of Inflation Data Amid Cooled Rate Hike Expectations
The US dollar hovered near its two-month low against major currencies on Monday as investors waited for this week's inflation data to gauge the Federal Reserve's rate path. The euro rose to $1.1558, nearing its strongest level since mid-June, while sterling remained steady at $1.3490, close to a five-week peak.
The dollar index, which tracks the currency against six major peers, was little changed at 99.6, hovering near its lowest level since June 2. The data from Friday's US jobs report showed an unexpected loss of jobs in July and revised job gains for the prior two months lower, cooling expectations for a Fed rate hike next month.
A consensus estimate calls for the core CPI to rise 0.2% month-on-month in July, lifting the annual rate to 2.5%, while producer price data on Thursday and retail sales figures on Friday will further inform the outlook for inflation. Rodrigo Catril, senior FX strategist at NAB, said 'Although there's a lot of inflation dynamics, the Fed will for now stay on the sidelines and wait to see how things play out.'