U.S. Dollar Sinks As Soft Inflation Data Boosts Fed Pause Hopes

(RTTNews) - The U.S. dollar fell against its major counterparts in the New York session on Wednesday, as the nation's consumer inflation slowed more than expected in June, raising hopes that the Federal Reserve may conclude its rate hiking cycle soon.

Data from the labor Department showed that the consumer price index rose by 0.2 percent in June after inching up by 0.1 percent in May. Economists had expected consumer prices to climb by 0.3 percent.

Excluding food and energy prices, core consumer prices still increased by 0.2 percent in June after rising by 0.4 percent in May. Core consumer prices were also expected to rise by 0.3 percent.

The report also showed the annual rate of consumer price growth slowed to 3.0 percent in June from 4.0 percent in May. Economists had expected the rate of growth to slow to 3.1 percent.

The annual rate of core consumer price growth also decelerated to 4.8 percent in June from 5.3 percent in May. The rate of growth was expected to slow to 5.0 percent.

While the Federal Reserve is still widely expected to raise interest rates by another quarter point later this month, the data has led to renewed optimism that will be the end of the central bank's rate-hiking cycle.

The dollar index that tracks the greenback against a basket of other currencies fell to more than a 1-year low of 100.58.

The greenback weakened to more than 1-year lows of 1.1100 against the euro and 1.2995 against the pound, from yesterday's closing values of 1.1008 and 1.2931, respectively. The greenback is seen finding support around 1.14 against the euro and 1.32 against the pound.

The greenback declined to near a 6-week low of 138.58 against the yen and a fresh 2-week low of 1.3149 against the loonie, from its previous close of 140.35 and 1.3229, respectively. The greenback may face support around 134.00 against the yen and 1.29 against the loonie.

The greenback depreciated to near a 3-week low of 0.6776 against the aussie and near a 2-month low of 0.6285 against the kiwi, from yesterday's closing quotes of 0.6685 and 0.6198, respectively. The greenback is likely to challenge support around 0.70 against the aussie and 0.64 against the kiwi.

The greenback touched 0.8690 against the franc, a level unseen since January 2015. The pair had closed Tuesday's deals at 0.8792. If the greenback falls further, 0.83 is possibly seen as its next support level.