US consumer inflation rose 0.1% in July, matching forecasts, reducing September rate hike odds to 40% from 54% a week ago.
The dollar stabilized on Thursday after US consumer inflation data for July met expectations, easing pressure on the Federal Reserve to raise interest rates next month. The consumer price index (CPI) increased 0.1% in July, in line with economist forecasts, prompting traders to scale back bets on a September rate hike to 40%, down from 54% last week.
The US currency remains 0.4% higher this week against a basket of major currencies, marking its first weekly gain in three weeks. Trading volumes are thin, typical for August, as markets await further inflation indicators, including the producer price index (PPI) and core personal consumption expenditures (PCE) data later this month.
Markets are closely watching inflation metrics, though Fed Chair Kevin Warsh has signaled a preference for a broader approach beyond core PCE. Analysts note that until the Fed clarifies its stance, CPI, PPI, and core PCE will remain key drivers for rate expectations.