US Dollar Weaksens After Softer-Than-Expected Inflation Data

The US dollar weakened against major currencies after data showed a smaller-than-expected increase in inflation. The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred gauge, rose 0.3% last month, missing economists' forecasts of a 0.4% gain.

The weaker-than-expected inflation reading led to reduced expectations for an interest rate hike from the Fed. As a result, US Treasury yields fell across the board, with the 2-year note yield down 4.15 basis points to 4.848%. The dollar pared recent gains against the euro and yen.

The euro rose 0.15% to $1.135725, while the single currency is still headed for a monthly loss against the dollar after two consecutive months of gains. Sterling strengthened 0.44% to $1.3287 but was set for a monthly loss against the dollar.