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Dollar holds steady after softer-than-expected US inflation data
The 2-year Treasury yield fell to 4.885% after the inflation release, trimming the dollar's momentum before it later rebounded.
The US dollar was flat against major currencies on Wednesday after inflation came in with a smaller-than-expected increase, lowering market expectations for a near-term Federal Reserve rate hike, according to Reuters. The initial read reduced bets as bonds rallied and yields pulled back before the dollar regained strength.
The article said the dollar had been strengthening alongside rising US Treasury yields as expectations grew for additional Fed rate hikes, with inflation attributed in part to higher oil prices. Even so, it noted the dollar remained on track for monthly gains versus the euro, Swiss franc and the pound sterling.
In live pricing, the 2-year note yield was last down 0.4 basis points at 4.885%. The euro was flat at $1.133050, with the single currency still headed for a monthly decline after two consecutive months of gains.
BNY strategist John Velis said it was unclear whether revised PCE data alone drove the softer print or whether other factors contributed, which initially pushed bonds higher and yields lower. Reuters also reported that strong GDP data was among the other factors cited, though the excerpt was cut off.