The dollar’s advance stalled on Thursday after an overall benign U.S. inflation reading overnight spurred traders to pare back bets for a near-term Federal Reserve interest rate hike.
US Inflation and Interest Rates
The greenback was little changed against the yen as of Asia’s midday, but remained on course to gain about 1% this week as markets bought back the currency pair following recent joint U.S.-Japan intervention that saw it plummet to a three-month low.
U.S. consumer prices increased 0.1% in July, in line with economists’ expectations, leading money markets to reduce the odds of a September rate hike to 40%, down from 54% a week ago, according to CME Group’s FedWatch.
Michael Wan, a currency strategist at MUFG, said the primary dilemma for the Fed now lies in weighing inflation risks against a softening labour market, particularly after the weaker-than-expected July payrolls report released last Friday.
The dollar changed hands at 159.44 yen, close to the 160 level that some market participants see as a line in the sand following the rare joint intervention at the end of July.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
