US inflation data aligned with forecasts, easing Fed hike bets but supporting near-term dollar stability around key levels.
The US Dollar Index rebounded to around 100.00 after an initial dip following July’s CPI report, which matched consensus estimates. Energy prices drove headline inflation higher, while core inflation remained subdued, reducing immediate pressure on the Federal Reserve to act aggressively.
Markets trimmed Fed rate hike expectations for September, pricing in 9 basis points of tightening compared to 12 basis points before the CPI release. The report reinforced expectations that the Fed may hold rates steady next month, though a hike remains possible.
The dollar’s resilience suggests near-term stability, with traders unlikely to further scale back rate hike bets despite the benign inflation print. Focus now shifts to upcoming economic data for further policy clues.