Soft US inflation reduces Fed rate hike bets, pressures Dollar – Commerzbank

Commerzbank analyst Volkmar Baur notes that the US Dollar has come under pressure after June inflation data came in softer than consensus. Both headline and core CPI fell below forecasts, prompting markets to reduce their expectations for Federal Reserve rate hikes by roughly half a percentage point.

The lower inflation print diminishes the urgency for the Fed to tighten further, which in turn weighs on the greenback. Baur's assessment highlights how shifting rate expectations continue to drive near-term USD direction.