© Reuters. FILE PHOTO: One hundred US dollar banknotes are seen in this illustration taken in Seoul on February 7, 2011. REUTERS/Lee Jae-won/File Photo
By Gertrude Chavez-Dreyfus
NEW YORK (Reuters) – The dollar fell to its weakest in more than a year on Wednesday after data showed U.S. consumer prices eased in June, suggesting the Federal Reserve may have to raise interest rates again this year.
It fell to as low as 100.58, the lowest since April 2022, and was last down nearly 1% at 100.58, on track for its biggest daily percentage loss since early February.
The dollar also recorded its lowest levels against the Swiss franc since early 2015 after the inflation report. It last fell 1.3% to 0.8676 franc, after falling to a session low of 0.8660 earlier, its lowest level since the Swiss National Bank removed the peg from the Swiss currency in January 2015.
US core consumer prices rose just 0.2% in June, compared to expectations for a 0.3% rise. On a yearly basis, US CPI advanced 4.8%, below market expectations for a 5% increase. That was also the smallest annual increase in more than two years.
“Today’s weaker core inflation release reinforces our fundamental case and initial market read on the recent Fed rate decision that the US central bank will only be able to raise again in this cycle,” writes Simon Harvey, Head of FX Analysis at Monex Europe. . In London, in the comments via email.
He added that the inflation report “led to the dollar extending its decline after the payrolls, with losses continuing to appear more against currencies that are considered undervalued and sensitive to US returns, such as the Norwegian krone, the Swedish krona and the Japanese yen.” .
US interest rate futures still show that traders overwhelmingly expect the policy rate to rise by a quarter of a point, to a 5.25%-5.5% range, at the Fed’s July 25-26 meeting, but now they see about a 25% chance of a rate hike. again before the end of the year, down from about 35% prior to the report.
“The Fed may have got itself on the hook with the July 26 rate hike. The data doesn’t confirm that they need an actual increase,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
“Since they’re stubborn, they’ll probably do it anyway. Fortunately, the market was expecting this rally. End nigh.”
Against the yen, the dollar fell to a six-week low of 138.17 yen. It last traded at 138.21, down 1.5%.
The euro jumped to its highest level since March last year at $1.1125. The single European currency was last up 1% at $1.1124.
The pound hit a 15-month high of $1.30, and was last up 0.5% at $1.2994. Sterling is leading expectations that the Bank of England will introduce more rate hikes to tame UK inflation, which is the highest of any major economy.
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Coin offer prices at 12:12 PM (1612 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar Index 100.5700 101.6000 -1.00% -2.822% +101.6100 +100.5600
EUR/USD 1.1126 USD 1.1010 + 1.07% + 3.85% + 1.1129 USD + 1.1008 USD
USD/JPY 138.2650 140.3800 -1.52% +5.44% +140.3400 +138.1700
EUR/JPY 153.84 154.49 -0.42% +9.65% +154.5200 +153.5200
USD/CHF 0.8675 0.8794 -1.35% -6.18% +0.8793 +0.8660
GBP/USD 1.2993 USD 1.2931 + 0.47% + 7.43% + 1.3000 USD + 1.2905 USD
USD/CAD 1.3177 1.3230 -0.40% -2.74% +1.3234 +1.3144
AUD/USD 0.6787 USD 0.6687 +1.48% -0.45% + 0.6795 USD + 0.6683 USD
EUR/CHF 0.9652 0.9679 -0.28% -2.46% +0.9695 +0.9629
EUR/GBP 0.8561 0.8511 +0.59% -3.20% +0.8565 +0.8506
$0.6297 0.6198 +1.59% -0.83% + $0.6299 + $0.6183
dollars / dollars
Dollar / Norway 10.1000 10.3530 -2.25% + 3.12% +10.3490 +10.1060
Euro / Norway 11.2434 11.3868 -1.26% + 7.14% +11.4120 +11.2340
Dollar / Sweden 10.3995 10.6608 -1.32% -0.08% +10.6696 +10.3835
Euro / Sweden 11.5699 11.7241 – 1.32% + 3.78% +11.7573 +11.5482