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Dollar tumbles after cooler-than-expected U.S. inflation data

08/10/2022 | 09:19am EDT

NEW YORK, Aug 10 (Reuters) - The dollar fell more than 1 percent on Wednesday following a cooler-than-expected inflation report for July that raised expectations of a less aggressive rate hike cycle than previously anticipated from the U.S. Federal Reserve.

U.S. consumer prices did not rise in July as the cost of gasoline plunged, delivering the first notable sign of relief for Americans who have watched inflation climb over the past two years.

Economists polled by Reuters had forecast a 0.2% rise on the heels of a roughly 20% drop in the cost of gasoline.

The dollar index, which measures the currency's value against a basket of currencies, was down 1.128% at 105.15 at 9:00 a.m. Eastern time (1300 GMT).

"This is good news for FX traders, as it was a pretty clear reaction and you will probably see that there still should be some follow-through," said Edward Moya, senior market analyst at Oanda.

The Fed has indicated that several monthly declines in CPI growth will be needed before it lets up on the increasingly aggressive monetary policy tightening it has delivered to tame inflation currently running at four-decade highs.

"They will be debating whether it’s a half-point increase, or 75 (basis points), but I think the risk of much more aggressive tightening is now off the table," said Moya.

The euro climbed 1.1% to $1.0325, sterling gained 1.17% to $1.2216, and the dollar also lost 1.12% on the Swiss franc, which traded at 0.9428 per greenback.

The greenback fell 1.38% versus the Japanese yen to 133.2 yen.

A quick reading on policymakers' reaction may come from Fed officials Charles Evans and Neel Kashkari, who were due to make speeches at 1500 GMT and 1800 GMT, though they will have another set of price data in August before September's policy meeting.

The Australian dollar, seen as a barometer of risk, was up 1.32% at $0.7054.

Bitcoin, rattled by a drumbeat of cryptocurrency fund wipeouts and thefts over recent months, was up 3.61% at $24,000.

(Reporting by John McCrank in New York; Editing by Mark Heinrich and John Stonestreet)

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.46% 0.88153 Delayed Quote.-4.01%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.41% 0.65426 Delayed Quote.2.15%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) -1.08% 93.044 Delayed Quote.12.11%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.52% 1.13317 Delayed Quote.6.99%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) -0.63% 0.6342 Delayed Quote.-3.70%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -1.53% 0.64123 Delayed Quote.-10.29%
BITCOIN (BTC/EUR) -0.09% 20359.6 End-of-day quote.-51.56%
BITCOIN (BTC/USD) -0.92% 20157.3 End-of-day quote.-57.77%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.13% 1.74115 Delayed Quote.-5.67%
BRITISH POUND / EURO (GBP/EUR) -0.52% 1.13944 Delayed Quote.-3.60%
BRITISH POUND / SWISS FRANC (GBP/CHF) -0.76% 1.10579 Delayed Quote.-9.23%
BRITISH POUND / US DOLLAR (GBP/USD) -1.64% 1.1165 Delayed Quote.-15.37%
CANADIAN DOLLAR / AUSTRALIAN DOLLAR (CAD/AUD) 0.49% 1.134533 Delayed Quote.4.20%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.06% 0.742335 Delayed Quote.6.49%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) -0.18% 0.72035 Delayed Quote.0.30%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -1.06% 0.72734 Delayed Quote.-6.41%
CHINESE YUAN RENMINBI / SWISS FRANC (CNY/CHF) 0.83% 0.139256 Delayed Quote.-3.82%
DANISH KRONE / SWISS FRANC (DKK/CHF) -0.22% 12.996 Delayed Quote.-5.88%
DOW JONES FXCM DOLLAR INDEX 0.49% 13411.37 Real-time Quote.9.72%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.42% 1.52798 Delayed Quote.-2.08%
EURO / SWISS FRANC (EUR/CHF) -0.22% 0.97038 Delayed Quote.-5.79%
EURO / US DOLLAR (EUR/USD) -1.13% 0.97989 Delayed Quote.-12.82%
HONGKONG-DOLLAR / SWISS FRANC (HKD/CHF) 0.91% 12.6146 Delayed Quote.6.51%
INDIAN RUPEE / AUSTRALIAN DOLLAR (INR/AUD) 0.79% 0.01901 Delayed Quote.1.96%
INDIAN RUPEE / EURO (INR/EUR) 0.39% 0.012433 Delayed Quote.4.22%
INDIAN RUPEE / SWISS FRANC (INR/CHF) 0.27% 0.012071 Delayed Quote.-1.73%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.52% 0.012186 Delayed Quote.-8.58%
JAPANESE YEN / SWISS FRANC (JPY/CHF) 0.62% 0.6825 Delayed Quote.-14.27%
NEW ZEALAND DOLLAR / SWISS FRANC (NZD/CHF) -1.13% 0.56033 Delayed Quote.-10.05%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -2.05% 0.56581 Delayed Quote.-16.09%
RUSSIAN ROUBLE / SWISS FRANC (RUB/CHF) 1.25% 0.016383 Delayed Quote.33.14%
SINGAPORE-DOLLAR / SWISS FRANC (SGD/CHF) 0.46% 0.6925 Delayed Quote.1.76%
SWEDISH KRONA / SWISS FRANC (SEK/CHF) -0.86% 0.088951 Delayed Quote.-10.44%
US DOLLAR / AUSTRALIAN DOLLAR (USD/AUD) 1.57% 1.559357 Delayed Quote.11.49%
US DOLLAR / EURO (USD/EUR) 1.14% 1.020575 Delayed Quote.13.88%
US DOLLAR / SWISS FRANC (USD/CHF) 0.88% 0.99035 Delayed Quote.7.30%
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