U.S. dollar retreats after softer-than-expected inflation data
TLT•The dollar weakened after August’s personal consumption expenditures price index rose 0.3%, below the 0.4% forecast. Traders priced a nearly 35% chance of a Federal Reserve rate hike in October, down from 70% a week earlier, while Treasury yields fell.
1. Inflation data weighs on dollar
The dollar retreated against major currencies after data showed the PCE price index rose 0.3% in August, below economists’ 0.4% forecast. The data reduced market bets on a Federal Reserve rate hike, and Treasury yields fell across the board.
2. Rate expectations shift
Traders priced a nearly 35% probability of a Fed rate hike in October, down from 70% a week earlier. The two-year Treasury yield fell 4.15 basis points to 4.848%. The euro rose 0.15% to $1.135725, while the dollar index fell 0.20% to 101.20.
