July US CPI matched forecasts on Tuesday, and the dollar ended the day higher against all major currencies.
Headline consumer prices rose 0.1% from the prior month and 3.4% from a year earlier. Both figures met expectations. The annual rate also eased from 3.5% in June. Meanwhile, core CPI rose 0.2% on the month and 2.5% on the year, also in line with forecasts. The annual core reading slipped from 2.6% and reached its lowest level since February.
July US CPI Details Show Mixed Picture
Shelter costs stayed firm in the report. Owners’ equivalent rent and primary rents both rose 0.3%. Medical care and airfares also moved higher. However, energy prices fell 1.5%, and gasoline dropped 2.9%. As a result, those declines helped limit headline inflation.
The report gave the Fed more room to stay on hold in September. Market-implied odds of a September rate hike fell to about 39% from 44% before the data. However, another round of inflation and jobs data will arrive before the September FOMC meeting.
Dollar Reverses Losses Across Major Currencies
Despite the expected July US CPI result, the U.S. dollar rose against every major currency during the session. The biggest gain came against the New Zealand dollar. In contrast, the smallest gain was against the Australian dollar. The greenback also posted solid gains versus the Swiss franc, Canadian dollar, and Japanese yen.
U.S. Treasury yields opened the North American session lower across the curve. They fell further after the CPI release. However, those moves faded later in the day. By the close, yields were mixed, with front-end and intermediate yields still slightly lower, while longer-term yields moved higher.
U.S. stocks finished mixed but mostly higher after the inflation report. Technology shares led the gains, and the Nasdaq 100 outperformed the other main indexes. Meanwhile, the Dow ended modestly lower, and the Russell 2000 set a fresh record closing high. Crude oil traded in a narrow range, with a high of $84.35 and a low of $82.40, before trading near $82.80 late in the session.
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Source: InvestingLive
