Galeanu Mihai
The US Dollar Index (DXY) hit a month low of $104.07 on the news of soft CPI data. The downward slide represents weakening of the U.S. dollar against the basket of major currencies that the index tracks.
The U.S. headline inflation rate eased to 3.0% Y/Y against the consensus of 3.1% and down from the prior reading of 3.3%. On a year-over-year basis, core CPI increased 3.3%, the smallest increase since April 2021. The June increase compares with the 3.5% expected and +3.4% in May.
United States 2-year Bond Yield (US2Y) and United States 10-year Bond Yield (US10Y) also turned lower after soft CPI data.
U.S. Dollar Index (DXY) has posted gains in three sessions this week, after closing lower last week amid softer US data and Fedspeaks.
Federal Reserve Chairman Jay Powell testified before the Senate Banking Committee, emphasizing the need for more data to confirm progress towards the Fed’s 2% inflation goal. Fed Chairman further stated that U.S. economy is no longer “overheated” signaling a high probability of a rate cut in September.
The odds of a quarter-point rate cut by the end of the Fed’s September meeting were at 70% before CPI report, according to the CME’s FedWatch tool.
