DXY Trims Gains on Soft Oil Prices and Falling Long-End Yields

The US Dollar Index (DXY) pared its gains on Friday after the latest US Consumer Price Index (CPI) data showed inflation remained at 3.4% annual rate, but a retreat in longer-dated US Treasury yields and softening oil prices weighed on it.

Headline CPI rose 0.4% month on month in August, matching forecasts, while core CPI increased 0.3%, exceeding the 0.2% forecast. The CME FedWatch Tool implies an 88% probability of a 25-basis-point hike next week, up from 67% earlier.

The dollar's follow-through was limited as oil slid and long-end yields fell: the 10-year yield traded around 4.94%, while WTI crude stood near $96.50 after briefly topping $100 and falling about 4% on the day.