The dollar index (DXY00) on Tuesday fell by -0.43% due to the increased chances of a Fed rate cut after the CPI report. The market boosted the chances for a Fed rate cut at the September meeting to 96% from 88%, after Tuesday's US CPI report was roughly neutral and did not contain any nasty surprises.
The July US CPI report of +0.2% m/m was roughly in line with market expectations. The July CPI year-on-year figure of +2.7% y/y was unchanged from June and was slightly weaker than expectations for a +0.1 point increase to +2.8%. The July US core CPI report of +0.3% m/m was in line with expectations. The July year-on-year core CPI figure of +3.1% y/y was up from June's +2.9% and was slightly stronger than market expectations of +3.0%. July's headline CPI of +2.7% y/y and core CPI of +3.1% y/y were up from the post-Covid 4.25-year lows of +2.3% and +2.8%, respectively, posted earlier this year.
