US Dollar Falls After CPI
The US dollar index fell to 108.7 on Wednesday, extending the pullback from the two-year high of 110 at the start of the week as the lack of sharp upside surprises to US inflation data rekindled bets that the Fed will lower its interest rate this year.
The headline CPI was loosely in line with expectations and rose 2.9% annually, while the core rate unexpectedly fell.
Concerns of stubborn price growth had recently been magnified by pro-inflationary policies advocated by the incoming Donald Trump presidential administration, including tariffs on major trade partners and higher extends of deficit spending. This raised expectations of fewer rate cuts by the Fed this year, as the strong labor backdrop gives the central bank leeway to prioritize inflation. In turn, the dollar was under fresh pressure from the yen amid hawkish remarks from Bank of Japan Governor Ueda, offsetting respite from a weaker pound following a softer inflation print.
Source: Trading Economics
