The euro, meanwhile, hit a seven-month high amid expectations among traders of an upcoming interest rate cut by the Fed.
He global dollar weakened on Wednesday against its major peers, helping the euro to reach a high of almost eight months, after the consumer price index of USA showed that inflation is declining, reinforcing expectations that the Fed’s interest rate cuts will Federal Reserve (Fed) be close.
He dollar index —which measures the performance of the greenback against a basket of six internationally relevant currencies— fell slightly to 102.57, while the euro rose 0.18% to $1.1014, surpassing the high hit during last week’s market turmoil and trading at its strongest level since Jan. 2.
Meanwhile, the yen was trading at 147.26 against the dollar, while sterling failed to advance, falling 0.29% to $1.2825 after data showed British consumer price inflation rose less than expected in July as services prices – closely watched by the Bank of England – rose less quickly.
Inflation data impacted the value of the dollar
US CPI rose moderately in July and the annual increase in inflation slowed to less than 3% for the first time since early 2021, raising expectations for a rate cut next month, although probably less aggressive than markets had expected.
The report adds to the slight increase in producer prices in July and suggests that the inflation is in a downward trend. This should give the Fed room to focus more on the labor market amid growing concerns of a sharp slowdown.
“This slightly lowered expectations of targeting a 50 basis point rate cut in September,” he said. I love Sahota, director of Klarity FX in San Francisco. “It’s been a much more muted, thoughtful approach to the inflation number.”
Source: Ambito
