By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -The U.S. dollar was mixed overall on Wednesday in choppy trading after data showed underlying inflation in the world’s largest economy rose in August, reinforcing expectations that the Federal Reserve will likely undertake a smaller rate cut of 25 basis points later this month.
The greenback posted gains against the Swiss franc, sterling, and euro, pushing the dollar index, a measure of the U.S. unit’s worth against six currencies, 0.1% higher on the day at 101.69.
Data showed that the U.S. consumer price index grew 0.2% last month after climbing 0.2% in July. In the 12 months through August, the CPI advanced 2.5%, the smallest year-on-year rise since February 2021, and followed a 2.9% increase in July.
But excluding the volatile food and energy components, the CPI climbed 0.3% in August after rising 0.2% in July.
“The immediate takeaway is that this dramatically reduces the likelihood of a 50 basis-point rate cut in September next week,” said Ben McMillan, principal and chief investment officer, at IDX Insights, in Tampa, Florida.
“That wasn’t unexpected because I thought the market was pretty aggressive at pricing in a 50-basis point rate cut in September anyway. This reaffirms what the Fed is really focused on – the jobs numbers. This makes the jobs numbers, and the revisions to those numbers, even more important.”
In midmorning trading, the dollar was up 0.4% against the Swiss franc at 0.85 franc, after earlier hitting a three-week high of 0.8544 following the inflation report.
Sterling dipped 0.2% against the dollar to $1.3050.
Versus the yen, the dollar hit the day’s high of 142.54 yen following the CPI numbers, before sliding 0.2% to 142.15. The yen got an extra boost earlier when Bank of Japan board member Junko Nakagawa reiterated the central bank would keep raising rates if the economy and inflation justified it.
Following the U.S. data, the rate futures market has priced in just a 15% chance of a 50-bp easing by the Fed at the September meeting, down from about 33% late on Tuesday, LSEG calculations showed.
The market though still factored in more than 100 bps in cuts this year.
Currency
bid
prices at
11
September
01:32
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 101.71 101.64 0.07% 0.34% 101.81 101.
index 26
Euro/Doll 1.1016 1.102 -0.04% -0.21% $1.1055 $1.1
ar 004
Dollar/Ye 142.32 142.46 -0.07% 0.93% 142.5 140.
n 72
Euro/Yen 1.1016 156.95 -0.11% 0.74% 157.01 155.
51
Dollar/Sw 0.8502 0.847 0.4% 1.04% 0.8544 0.84
iss 23
Sterling/ 1.3052 1.308 -0.2% 2.57% $1.3112 $1.3
Dollar 047
Dollar/Ca 1.3597 1.361 -0.08% 2.59% 1.3617 1.35
nadian 74
Aussie/Do 0.6648 0.6653 -0.05% -2.48% $0.6674 $0.6
llar 636
Euro/Swis 0.9364 0.9332 0.34% 0.84% 0.9381 0.93
s 08
Euro/Ster 0.8439 0.8424 0.18% -2.64% 0.8446 0.84
ling 22
NZ 0.6124 0.615 -0.39% -3.06% $0.6155 0.61
Dollar/Do 15
llar
Dollar/No 10.8589 10.8407 0.17% 7.14% 10.878 10.7
rway 894
Euro/Norw 11.9628 11.9468 0.13% 6.58% 11.9729 11.9
ay 198
Dollar/Sw 10.3956 10.3734 0.21% 3.26% 10.4138 10.3
eden 269
Euro/Swed 11.4521 11.4313 0.18% 2.94% 11.4692 11.4
en 115
