Inflation Eases, But US-Iran Stalemate Keeps Dollar Firm

US inflation numbers for July showed a moderation in prices, easing pressure on the Federal Reserve to raise interest rates soon. The Consumer Price Index (CPI) and Core CPI both cooled down as expected, taking some heat off the Fed's September meeting.

The odds of a 25-basis-point hike in September have dropped to around 35% from over 50% before the data was released. However, inflation remains too high, and the Fed will consider the August CPI and NFP reports as well as July PCE figures before making a decision.

Despite the moderation in inflation, oil prices slipped slightly due to reduced demand forecasts from OPEC and the International Energy Agency. The ongoing stalemate over the Strait of Hormuz is still supporting the safe-haven US dollar, which held firm despite the soft CPI report.