Dollar Firm after Inflation Data Douse Bets for Big Fed Cut

The dollar traded near a four-week high versus the euro today after signs of some stickiness in US inflation reinforced expectations that the Federal Reserve would avoid a super-sized interest rate cut next week. The dollar gained against the yen, following a turbulent session on Wednesday that saw the US currency plunge as much as 1.24% to the lowest this year (2024) before recovering all its losses after the consumer price data. The dollar rose 0.31% to 142.805 yen, after earlier gaining as much as 0.41%. It dipped as low as 140.71 for the first time since 28 December 2023 in the prior session. The US consumer price index rose 0.2% last month, matching the advance in July. But excluding the volatile food and energy components, the gauge climbed 0.3%, accelerating from the previous months 0.2% increase. As a result, traders essentially priced out the chances of a 50-basis point rate cut on 18 September 2024, paring the odds to 15% versus 85% probability for a 25-bp reduction. The Swiss franc was on the back foot, with the dollar gaining 0.11% to 0.8531 franc, after touching the highest since 12 August 2024 at 0.8544 franc on Wednesday. The Aussie added 0.22% to $0.6690, while New Zealand's kiwi climbed 0.23% to $0.6152. Source: Oman News Agency