Dollar Volatility Ahead: Markets Anticipate Crucial July Inflation Report

The US dollar index is hovering around 99.6 as markets wait for the release of July's Consumer Price Index (CPI) data, which could influence the Federal Reserve's decision on interest rates.

A weaker-than-expected jobs report in July led to a decline in Treasury yields and reduced the likelihood of a September rate hike from 67% to around 44%. Now, economists expect core CPI to rise 0.2% in July, taking the annual rate to 2.5%.

BNY, a global custody bank, noted that the labor-market surprise has lowered investors' expectations for 'real' rates (interest rates after inflation), but hasn't fully locked in a clear path toward easier policy.