Data on Wednesday showed that US consumer prices were unchanged on a monthly basis in July, after advancing 1.3% in June.
“Yesterday’s data gave hope that inflation has peaked and the Fed will have to raise rates less sharply to keep inflation in check.”currency analysts at Commerzbank said in a note.
Traders cut bets that the Fed would raise rates by 75 basis points for the third straight time at its September policy meeting, and now see a half-point hike as the most likely option.
Fed policymakers sought to temper any expectations of significantly easier policy, with Neal Kashkari telling a conference on Wednesday that the central bank was “a long, long way from declaring victory” over inflation.
“While yesterday’s data clearly reduces the risk of further aggressive action from the Fed (+75 basis points) and thus reduces demand for US dollars, we also see it as unlikely that this data alone will trigger much more US dollar sales from now on,” currency analysts at MUFG said in a note.
The euro and the Japanese yen were among the currencies that benefited from the dollar’s weakness, with both extending their gains from the previous session.
The euro was up a third of a point at $1.03330, while the yen was up 0.2% at 132.595 per dollar.
Sterling was down 0.2% against the dollar at $1.21980, after gaining more than 1% the previous day.
Source: Ambito
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