Dollar Weakened by Fiscal Doubts and Slowing Inflation

The US dollar has weakened as investors focus on potential US Treasury measures to stem the decline in Treasury yields.

According to MUFG's Derek Halpenny, 'yields are broadly unchanged today although JGB yields have jumped following the release of nationwide CPI data for July which revealed a rebound back toward the 2.0% level.'

The core-core CPI rate jumped to 1.9%, with underlying inflation lifted by certain foods and dining out.

Halpenny remains sceptical that the US will deliver credible fiscal consolidation, stating 'we, like many market participants, are very sceptical of the US announcing anything of any significance that would lead to credible fiscal consolidation.'