Dear clients,
The dollar fell to its lowest level in more than a year on Wednesday after data showed U.S. consumer price growth slowed in June, indicating the Federal Reserve may raise interest rates only one more time this year.
The dollar index fell to 100.54, the lowest since April 2022, and was last down 1% to 100.55, the biggest daily decline since early February.
Following the inflation report, the dollar also hit its lowest against the Swiss franc since early 2015. It was last down 1.3% to 0.8675 francs, having previously fallen to a session low of 0.8660, the lowest since the Swiss National Bank de-pegged the Swiss currency in January 2015.
Data showed that U.S. core consumer prices rose just 0.2% in June, compared with forecasts for a 0.3% rise. The monthly increase in core prices was the smallest since August 2021. On an annualized basis, the core U.S. CPI rose 4.8%, below market expectations for a 5% increase. It was the lowest annualized gain in more than two years.
U.S. rate futures continue to show traders overwhelmingly expect a quarter-point increase in the discount rate, to the 5.25%-5.5% range, at the Fed’s July 25-26 meeting, but the probability of another rate hike before the end of the year is now around 25%, down from around 35% before the report.
