Dollar treads water as Fed hike bets pared on benign US inflation

Business Recorder reported that the US dollar stopped rising on Thursday after July consumer price figures matched economists' forecasts, prompting traders to scale back wagers on a Federal Reserve rate increase. The dollar index held at 100, though it remained on course for a weekly gain of 0.4 per cent. Consumer prices rose 0.1 per cent in July, and CME Group's FedWatch tool showed the probability of a September hike falling to 40 per cent from 54 per cent a week earlier.

The dollar traded at 159.44 yen, close to 160, a level some market participants watch after the rare joint intervention at the end of July. That action had pulled the exchange rate from close to 164, near a four-decade peak, down to 155.20 within three days. Bank of America's Shusuke Yamada said a move above 160 could signal limited policy resolve, and noted that Japan's credibility on defending the yen has weakened since the coordinated US intervention on July 31.

Elsewhere, the euro was little changed at $1.1523 and sterling eased 0.05 per cent to $1.3489 ahead of a batch of UK releases including GDP. The Australian dollar slipped 0.2 per cent to $0.7049, close to Wednesday's 10-week high. Reserve Bank of Australia Assistant Governor Christopher Kent told a Reuters event in Sydney that inflation risks were skewed heavily to the upside, and rates would need to rise again if those risks materialised.