Dollar Weakens Ahead of U.S. Inflation Data, Economists See Slowing Inflation

A gauge of dollar strength fell to a three-month low ahead of tonight’s U.S. inflation data, which could reinforce bets that the Fed‘s tightening is nearing an end.
Economists expect the data for June to show a slowdown in year-over-year growth in consumer prices, with headline data likely to fall to the weakest level since March 2021.
“Expectations that the Fed is coming to an end to its rate hike cycle and U.S. CPI cooling further may strengthen bearish dollar bets. Traders may also be trimming long dollar positions in carry trades,” said Mizuho Bank strategist Ken Cheung.
Bullish dollar bets are losing appeal to traders amid growing signs that U.S. interest rates may be approaching a peak.
“The U.S. dollar index is likely to fall, and tonight’s weaker-than-expected U.S. CPI will certainly be the catalyst for that,” said Khoon Goh, head of Asia research at ANZ Bank in Singapore.