Traders reduce USD positions ahead of key US inflation data, with Fed rate hike odds rising to 43.2% for December.
The US Dollar retreated to 99.85 in early European trading Tuesday, pulling back from a two-month high as geopolitical risks in the Middle East eased. Investors are now focused on Wednesday’s US Consumer Price Index and Thursday’s Producer Price Index reports for signals on the Federal Reserve’s next move.
Markets have repriced the probability of a 25 basis points rate hike in December to 43.2%, up from 14% a month ago, according to the CME FedWatch tool. The shift follows recent hawkish commentary and stronger-than-expected economic data.
China’s trade surplus widened to $105.43 billion in May, up from $84.82 billion in April, adding to global trade dynamics. The Dollar weakened most against the New Zealand Dollar amid the broader pullback.