U.S. Dollar Subdued Following Tame Inflation Data
August 14 2024 - 9:23AM
RTTF2
The U.S. dollar was lower against its major counterparts in the
New York session on Wednesday, as consumer inflation moderated in
July, reinforcing expectations for a rate cut from the U.S. Federal
Reserve in September.
Data from the Labor Department showed that the consumer price
index rose by 0.2 percent in July after edging down by 0.1 percent
in June. The modest increase by consumer prices matched
expectations.
Core consumer prices, which exclude food and energy prices, also
crept up by 0.2 percent in July after inching up by 0.1 percent in
June. The uptick by core consumer prices was also in line with
economist estimates.
Meanwhile, the report said the annual rate of consumer price
growth slowed slightly to 2.9 percent in July from 3.0 percent in
June. Economists had expected the pace of growth to remain
unchanged.
The annual rate of core consumer price growth also slipped to
3.2 percent in July from 3.3 percent in June, in line with
expectations.
Expectations for 50 basis point rate cut at the Fed's Sept.
17-18 meeting diminished following the release of CPI report.
However, traders increased bets of a 25 basis point rate cut by the
Fed in September.
CME Group's FedWatch Tool is currently indicating a 56.5 chance
the Fed will lower rates by a quarter point and a 43.5 percent
chance of a half point rate cut.
The greenback declined to a 7-1/2-month low of 1.1047 against
the euro and near a 4-week low of 1.3689 against the loonie, from
yesterday's close of 1.0993 and 1.3705, respectively. The currency
may locate support around 1.12 against the euro and 1.33 against
the loonie.
The greenback eased against the yen and the franc and was
trading at 147.10 and 0.8650, respectively. This may be compared to
its early 6-day lows of 146.07 against the yen and 0.8616 against
the franc. The currency is poised to challenge support around
142.00 against the yen and 0.85 against the franc.
The greenback retreated to 0.6030 against the kiwi, from an
early 2-day high of 0.6002. This may be compared to a previous
4-week low of 0.6084. If the currency falls further, it is likely
to test support around the 0.63 region.
The greenback pulled back to 1.2863 against the pound. The
currency is seen finding support around the 1.31 level.
Meanwhile, the greenback rose to 0.6601 against the aussie,
reversing from an early fresh 3-week low of 0.6642. The currency is
likely to locate resistance around the 0.64 level.
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