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US dollar retreats on weak inflation figures

The US dollar has taken a hit after US consumer price growth failed to heat up as hoped in July.

The dollar index, which measures the buck against a basket of peers, made a hasty retreat as the latest figures showed consumer inflation undershooting analysts’ targets. At pixel time, it was down 0.4 per cent on the day to 93.03.

The latest in a string of underwhelming readings has fueled market concerns about how the Federal Reserve will react as it debates the path of future interest rate rises.

Lukman Otunuga, a research analyst at FXTM, said ahead of the release:

Investors need more convincing over the possibility of higher US interest rates this year and this should come in the form of rising inflation. With concerns over stubbornly low inflation weighing heavily on the prospect of another US interest rate increase, the pending US CPI data will be in sharp focus. A soft inflation figure below market consensus, is likely to quell expectations of higher US interest rates, ultimately pressuring the dollar.