Softer US inflation data pushes USD lower, reducing September Fed rate hike probability to 34.8% from 40%.
USD/CHF retreated to 0.8140 in Asian trading Friday, ending a four-day rally as US inflation data undershot expectations. The US Producer Price Index (PPI) remained flat in July, below the forecasted 0.2% rise, while core PPI rose 0.2%, slightly under consensus estimates of 0.3%.
Annual headline PPI climbed 4.7% year-over-year, with core PPI up 4.2%, signaling easing price pressures. The Bureau of Labor Statistics revised June’s PPI down to a 0.1% decline. Swiss inflation also softened, dropping to 0.4% in July, its lowest in four months.
Markets now price a 34.8% chance of a Fed rate hike in September, down from 40% post-data. Attention shifts to upcoming US July retail sales figures for further direction.