Cooling US inflation reduces Fed rate hike odds for September to 34.8%, pressuring the USD ahead of July retail sales data.
The US Dollar Index (DXY) fell below the 100 mark, trading at 99.90 in Asian hours, extending losses after softer US inflation data. The decline follows a flat July Producer Price Index (PPI) print, below the expected 0.2% rise, and a 0.2% core PPI increase, missing consensus estimates of 0.3%.
Annual headline PPI rose 4.7% year-over-year, while core PPI climbed 4.2%, reinforcing signs of easing price pressures. June’s PPI was revised down to a 0.1% decline. The data has shifted market expectations, with Fed rate hike probabilities for September dropping to 34.8% from 40% post-release.
Investors now await July US retail sales figures, which could further influence Fed policy bets. The dollar’s retreat reflects waning hawkish sentiment, though lingering energy risks may limit deeper losses.