Dollar slips as in-line CPI tempers rate-hike bets
An employee holds U.S. dollar bank notes at a money changer in Jakarta, Indonesia, April 9, 2025. REUTERS/Willy Kurniawan
Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
Aug 12 : The dollar weakened on Wednesday after U.S. consumer price inflation matched economists’ expectations in July, easing concerns that a hot reading could reinvigorate expectations for a near-term interest rate hike.
In the 12 months through July, the CPI advanced 3.4 per cent after rising 3.5 per cent in June. Core CPI increased 2.5 per cent in the 12 months through July after climbing 2.6 per cent in June.
Traders have pared bets on a rate increase at the Federal Reserve’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 per cent odds of a September rate hike, down from 44 per cent before Wednesday’s data and from 55 per cent 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. If anything, it was a bit firmer than I expected,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
“But we are getting a little bit of a weaker dollar after the CPI. It looks like the market may have downgraded very slightly the odds of a September rate hike,” Chandler said.
Oil prices rose in volatile trade on Wednesday after attacks on two ships reinforced worries about disruptions to Middle East supplies and as talks to end the Iran war hit an impasse.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.12 per cent to 99.69, with the euro up 0.12 per cent at $1.1554.
The Japanese yen strengthened 0.3 per cent against the greenback to 158.84 per dollar. It has pared gains that were made during the joint intervention in late July by U.S. and Japanese authorities to strengthen the Japanese currency.
“The release of the latest CFTC report at the end of last week did show that that intervention triggered a sharp squeeze of speculative short yen positions,” said Lee Hardman, senior currency economist at MUFG.
“If there is no change in fundamentals, speculators will be encouraged to rebuild short yen positions at a time when stable financial market conditions remain supportive for carry trades,” he added.
The New Zealand dollar was little changed on the day at $0.5879 after Prime Minister Christopher Luxon said on Wednesday he had won a confidence vote of ruling party lawmakers, following speculation about his leadership months from a general election.
Source: Reuters
Sign up for our newsletters
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
About The Author
