$Dollar Weakens Amid Cooler Inflation Data and Pared Rate Hike Bets
The US dollar weakened on Wednesday after July's consumer price inflation (CPI) matched economists' expectations, tempering bets for a near-term interest rate hike by the Federal Reserve.
CPI in the 12 months through July rose 3.4%, down from June's 3.5% increase, while core CPI increased 2.5% in the same period after climbing 2.6% in June.
Traders have pared bets on a rate hike at the Fed's September 15-16 meeting since Friday's jobs report showed employers unexpectedly shed jobs in July. Fed funds futures traders are now pricing in 40% odds of a September rate hike, down from 44% before Wednesday's data and from 55% a week ago.
'I thought that after the soft jobs data on Friday, that the dollar would stay soft because of the expectations of the soft CPI. The dollar really didn’t go anywhere,' said Marc Chandler, chief market strategist at Bannockburn Global Forex.