Dollar Weakens as Fed Seen on Hold Following Contained Inflation

The US Dollar weakened in response to the latest Consumer Price Index (CPI) report from July, which showed headline inflation rising 0.1% month-over-month and core CPI increasing 0.2% m/m.

According to TD Securities strategists, the contained tariff pass-through and signs of normalization in services inflation reduce the need for tighter Federal Reserve policy.

The firm maintains its view that the Fed will keep its policy stance unchanged this year, despite some risks associated with the upcoming PPI report.