The dollar plummeted to a fresh two-month low on Wednesday as data showed the growth in U.S. consumer prices moderated in June, suggesting that the Federal Reserve may have to hike interest rates just one more time this year.
The dollar index dropped as low as 101.04, the lowest in two months, after the data, and was last down 0.4% at 101.27 .
The greenback also touched its lowest against the Swiss franc since early 2015 after the inflation news. It was recently down 0.6% at 0.8750 francs, having dropped to a session low of 0.8735 earlier, its worst since the Swiss National Bank withdrew the peg from the Swiss currency in January 2015.
Core U.S. consumer prices rose just 0.2% in June, compared with forecasts for a gain of 0.3%.
On an annual basis, U.S. CPI advanced 4.8%, lower than market expectations for a 5% increase. That was also the smallest annual increase in more than two years.
U.S. rate futures still show traders overwhelmingly expect the policy rate to rise a quarter point, to a 5.25%-5.5% range, at the Fed’s July 25-26 meeting, but now see about a 25% chance of another rate hike before year’s end, down from about 35% before the report.
“The Fed may have talked itself into a corner with a July 26th rate hike. The data don’t confirm that they need to actually hike,” said Brian Jacobsen, chief economist, at Annex Wealth Management, in Menomonee Falls, Wisconsin.
“Since they’re stubborn, they’ll probably do it anyways. Thankfully the market has been expecting that hike. The end is near for hikes.”
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Currency bid prices at 8:58AM (1258 GMT)
| Description | RIC | Last | U.S. Close Previous Session | Pct Change | YTD Pct Change | High Bid | Low Bid |
| Dollar index | 101.1900 | 101.6000 | -0.40% | -2.222% | +101.6100 | +101.0400 | |
| Euro/Dollar | $1.1059 | $1.1010 | +0.45% | +3.21% | +$1.1072 | +$1.1008 | |
| Dollar/Yen | 139.2500 | 140.3800 | -0.80% | +6.21% | +140.3400 | +138.7700 | |
| Euro/Yen | 154.01 | 154.49 | -0.31% | +9.77% | +154.5200 | +153.5200 | |
| Dollar/Swiss | 0.8745 | 0.8794 | -0.51% | -5.38% | +0.8793 | +0.8735 | |
| Sterling/Dollar | $1.2951 | $1.2931 | +0.12% | +7.05% | +$1.2975 | +$1.2905 | |
| Dollar/Canadian | 1.3219 | 1.3230 | -0.08% | -2.43% | +1.3233 | +1.3197 | |
| Aussie/Dollar | $0.6733 | $0.6687 | +0.67% | -1.25% | +$0.6751 | +$0.6683 | |
| Euro/Swiss | 0.9672 | 0.9679 | -0.07% | -2.25% | +0.9695 | +0.9663 | |
| Euro/Sterling | 0.8537 | 0.8511 | +0.31% | -3.47% | +0.8542 | +0.8506 | |
| NZ Dollar/Dollar | $0.6231 | $0.6198 | +0.42% | -1.98% | +$0.6246 | +$0.6183 | |
| Dollar/Norway | 10.2140 | 10.3530 | -1.24% | +4.19% | +10.3490 | +10.1940 | |
| Euro/Norway | 11.2984 | 11.3868 | -0.78% | +7.67% | +11.4120 | +11.2620 | |
| Dollar/Sweden | 10.5439 | 10.6608 | -0.54% | +1.30% | +10.6696 | +10.5152 | |
| Euro/Sweden | 11.6613 | 11.7241 | -0.54% | +4.59% | +11.7573 | +11.6390 |
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Amanda Cooper in London, Chuck Mikolajczak in New York and Ann Saphir in San Francisco
