The U.S. dollar fell Wednesday after the consumer-price index for June showed the rate of inflation slowing to the lowest level since 2021.
The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, fell to 100.69 on Wednesday, on pace for the lowest level since April 2022, according to Dow Jones Market Data.
“The dollar selling off across the board after today’s soft US inflation report intensified bets that the Federal Reserve’s rate hike cycle may soon be nearing an end,” Matthew Ryan, head of market strategy at global financial services firm Ebury wrote in emailed comments.
Data released Wednesday showed that the U.S. consumer prices rose a modest 0.2% in June, while economists polled by The Wall Street Journal forecast a gain of 0.3%. The yearly rate of inflation decelerated to 3% from 4% in the prior month, the lowest since March 2021.
Fed fund futures traders are still pricing in an over 90% chance that the Fed will raise its benchmark interest rate by 25 basis points in its meeting later this month, according to CME Fed Watch. They are pricing in a 12.9% likelihood that the U.S. central bank will raise interest rates again in September. That is down from 22.3% a day ago.
The Fed’s policy rate currently sits in a range of 5%-5.25%, its highest since 2007.
U.S. stocks rose Wednesday, with the Dow Jones Industrial Average
DJIA,
up 0.8% and the S&P 500
SPX,
up 1%. The Nasdaq Composite
COMP,
gained 1.3%, according to FactSet data.
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